Walmart Inc at Oppenheimer Consumer Growth and E-Commerce Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : So John, I wanted to kick it off with a couple of macro questions. So Walmart US continues to see strong top line results in traffic. However, discretionary has remained relatively soft in recent quarters as consumers manage budgets in the face of multiple quarters of inflationary pressures and are potentially still lapping pandemic buying. So how would you describe the overall health of your consumer as we sit here today? And what are your expectations for the balance of the year?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And then there's been more noise in the market following announcement from multiple players on plans to lower prices. So overall, what is your team seeing on the competitive and promotional front here in the US? And then how do you feel about your pricing position on price gaps today?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And then how are consumers actually responding to all the rollbacks that you have in stores, is a response to what you'd expect at this point? Or maybe just some thoughts there.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And then the last macro question I want to cover is just the food away from home channel versus food at our home channel. So we've seen some signs of distress out there, especially the low income consumer in the past new channel. So has your team started to see any meaningful shifts towards more at home food consumption? And how is Walmart thinking of potential opportunities here for the balance of the year? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And then shifting gears just to market share. So Walmart has had significant success in scaling down the channel model in the US and has continued to gain share quarter after quarter. So how do you feel about the company's ability to retain a large portion of these new customers, including the higher income cohort in the ecosystem versus the past?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. So it sounds like the market share that you gained could be sticky as we exit whatever you call it, downturn or whatever situation we're in right now.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. Great. And the commentary for your team has also been quite positive on the e-commerce profitability front. Can you share with us what your team has been seeing lately in the runway for improvement from here?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And now shifting gears to alternative revenue streams. So over the past few quarters, Walmart has really scaled the marketplace offering with now more than 400 million SKUs. Recent commentary has been very positive in some of the more discretionary categories, including, as you mentioned earlier, apparel even with pretty severe macro pandemic headwinds. So I have a few questions here. So first, what is your team doing to ensure the uniqueness of your marketplace offering versus other players?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And then just from an assortment perspective, so 400 million-plus SKUs today, where are we? Is there still a big runway from here on the assortment side? Or are you guys happy with where you are currently? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And then the next area, I want to cover is media. So media has remained a bright spot for Walmart US with Walmart Connect growing more than 25% in the latest quarter. So where are we on the advertising journey and then the bigger opportunities you see for Walmart US here?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. And the last area I wanted to cover an alternative revenue stream is just Walmart Plus. So I've been a member since you guys launched a few years ago. So in Q1, you guys indicated that it's continued to grow double digits. Are there any learnings you could share with us in terms of what you're seeing out of Walmart Plus and then without giving away any secrets, how do you see the offer evolving over time from here? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. Great. So I'll have to wait for the future additions.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And then moving on to a few other areas that are topic in our investor conversation lately. So your general merchandise category remains in negative territory, but there appears to be underlying strength on the unit front and bright spots coming out of marketplace. Is it possible to see an inflection back to deposit trends this year? Or is there anything else you can share with us in regards to how you think about the recovery, John, you amortized from here? And then what are the green shoots you'd call out within your general merchandise categories?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. Great. And I guess just on the deflation front, like do you guys expect deflationary process to ease from here, especially with some of the lapse from last year? Or just any thoughts on how that plays out with GM?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. That's helpful color. And then switching gears to inventory. So we've seen the best work conditions at Walmart US across geographies since we've been covering the company. So what do you attribute the improvement to? And what is your confidence sustain these healthy levels? And just overall, what are the opportunities that you still see from here on the inventory front?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : So it sounds like the manager and other wage investments, you guys are already seeing a return from those investments you made earlier this year.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. In the last two or three minutes, I want to cover your supply chain. So Walmart continues to make significant investments in automating the supply chain, I would love to hear about the benefits your team is already seeing. And how does your team see the savings and returns manifesting over the next few years?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. Thank you. So thanks, John and Kary for joining us today. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.