Walmart FY 2Q18 Earnings Call Notes

Douglas McMillon

Growth

Walmart U.S. grew comp sales 1.8% and comp traffic 1.3%. We continue to gain traction in e-commerce with Walmart U.S. GMV up 67%.

Moving to be more of a digital enterprise

“Our strategy is to make every day easier for busy families. To accomplish this, we continue our transformation to become more of a digital enterprise that moves with speed and agility. I’m encouraged by innovation in the business. We’re testing associate delivery of walmart.com orders in a few stores and by the end of the year, we’ll have approximately 100 automated pickup towers in stores across the U.S., where customers can pick up their orders within a matter of minutes.”

Seen strong results from online grocery rollout

“We’ve seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations, and we’re expanding this service in many of our markets around the world. Retail is constantly evolving and it’s critical that we move even faster as the customer and competitive landscape continue to change.”

Marc Lore and team delivered robust growth

“In Walmart U.S. e-commerce, Marc Lore and the team delivered another quarter of robust topline growth with GMV up 67%, including acquisitions. The majority of this growth was organic through walmart.com as customers are finding a broader assortment and more options to receive what they want at their convenience.”

Wal Mart at DB Access Conference Notes

Brett Biggs

We have 50m SKUs online

“So back about a year ago, we had around 10 million items online. Now, we have over 50 million items online. Now, 50 million still not as much as some of our competitors would have. The difference between 10 million and 50 million is a big difference. Over time, I think, we’ll figure out what the right number of skews would be online.”

There will always be places where stores make sense

“So I’ll start with the kind of the square footage strategy. So today in the U.S. about 90% of U.S. population lives within 10 miles of one of our stores. So we’re very close to the customer. And we think that’s a benefit for us going forward whether that’s brick-and-mortar, or whether that’s eCommerce. We’ve talked about that we’re building fewer stores in the U.S. We’ll have a couple of handfuls of Supercenters that will open and about the same number of neighborhood markets. We want to – I think there will always be places where stores will make sense. ”

Wal-Mart Stores’ (WMT) at Robert W Baird Conference

Targeting different audiences

“the way I think about it is really there is two main sites in Jet and Walmart, both mass sites going after different audiences, but sharing the same back end. So we get leverage on the retail teams, on the logistics. But from a consumer standpoint, we get access to more customers. We are sort of able to now push Jet more premium, going after the higher income urban customer, which is not the typical Walmart.com shopper and Walmart.com with everyone else.”

More  focused on organic growth

“We are really focused on organic growth. We have got store number eight, where we are incubating start-ups that are ring-fenced with the store organization. We are building that from scratch. We will be partnering with folks, but primarily organic.”

Conversational commerce is the future

“I think in order to think about the future, you have to kind of look to the past a little bit and make sure you are looking through the right lens….I think two big areas. One is conversational commerce with the advances in artificial intelligence, machine learning.  It won’t be long before you are able to have a much richer experience and talk in a very conversational way, where you have the – you are talking to as much an expert in a particular product category like you would if you walked into a specialty retailer and talk to the expert on the floor. ”

Laser focused on offering unique value

“it’s really just about getting more customers to shop with you and have them come back more often and buy more when they do. And that’s what we saw in Q1. We saw a lot more new customers come in. We saw existing customers shop more frequently and buy more. So at the end of the day, comes down to the value proposition that you offer customers….that’s where we are maniacally focused right now.”

Wal-Mart Stores’ (WMT) Q1 2018

Brett Biggs – EVP and CFO

Comp inventory down

“our sales strengthened as the quarter progressed, delivering comp sales growth of 1.4%, led by an increase in customer traffic of 1.5%. This marks the 10th consecutive quarter of positive comp traffic…During the quarter, inventory at comp stores fell 7.3%, while in-stock levels remained high…For the 13-week period ending July 28, 2017, we expect comp sales to increase between 1.5% and 2%. “

E-commerce is growing

“The U.S. e-commerce GMV growth accelerated significantly, up approximately 69%. Through the lens of strong, efficient growth, I’m pleased with the results. Gross profit margin increased 1 basis point during the quarter. The rate for Walmart U.S. was flat, while Walmart International was up slightly.”

Wal-Mart 4Q16 Earnings Call Notes

Doug McMillon

Consumer expectations continue to change rapidly

“In conclusion, as I step back and look at the retail landscape, customer expectations continue to change rapidly. They will increasingly expect even more personalization and convenience in their shopping experience. We’re moving quickly to respond to the current opportunities as well as to innovate and transform the shopping experience for our customers in the future.”

The supercenter remains the best retail format in the world

“According to Bain, Black Friday weekend sales marked the first time the number of people shopping online surpassed people shopping in stores, and over half did so through mobile devices. And more than 70% of traffic to Walmart.com during Black Friday and Cyber Monday was driven by mobile. While e-commerce is growing rapidly customers continue to rely on brick and mortar formats. The Supercenter remains the best retail format in the world, and going forward, we will continue to leverage these unique assets, even more with initiatives like online grocery, in-store pickup and others. Rapid advances in technology mean we need to become more of a digital enterprise – and that’s what we’re doing.’

Wal Mart 3Q17 Earnings Call Notes

Wal-Mart Stores’ (WMT) CEO Doug McMillon on Q3 2017 Results

Jet acquisition complete

“Next, we recently completed the acquisition of Jet.com and we’re excited to have Marc Lore as a member of our leadership team driving U.S. eCommerce for Walmart and Jet.com. One of the reasons Jet.com makes sense for Walmart is the common ground we share with basket economics. Walmart’s advantage has always been in providing the lowest prices on a basket of goods, and Jet has created a unique way to deliver the lowest cost basket online. When customers build a bigger basket online, the economics work in their favor and in ours. Marc has hit the ground running since the acquisition was finalized. We immediately set up teams to accelerate our integration efforts and we’re working hard to leverage our strengths, such as optimizing our combined fulfillment networks, utilizing our scale in areas like shipping, sharing our assortment and leveraging the strengths of our marketing teams. We’re excited to reap the benefits of our combined businesses and we look forward to updating you on our progress going forward.”

Brett Biggs

-5.8% comp in Britain

“Turning to the U.K., net sales declined 3.8% and comp sales declined 5.8% in the third quarter. The key priority remains driving an improved customer experience and building sales momentum by simplifying the offer, improving product availability and making strategic investments in service and price. We are moving with pace as we address our customer value proposition in the market.”

1.6% comp in China

“In China, net sales grew 4.2% and comp sales increased 1.6% this quarter. The key drivers of the performance were strong seasonal and festive categories during the Mid-Autumn Festival and a strong performance in fresh categories, an ongoing focus area for us in China. As Doug mentioned, through our recent alliance with JD.com, we continue to offer exciting new ways for customers to access high-quality products from around the world. It was another solid performance from Walmart International.”

Walmart at Goldman Sachs Conference Notes

Brett Biggs – EVP and CFO

Jet team is a big benefit for Walmart

“The second piece of that is the team. Marc Lore and the team have done great things with Jet; they did great things with Quidsi prior to that. And so the ability to take what that team knows, their industry knowledge and what they do and helping us continue to grow Jet but also Walmart.com is certainly a big benefit for Walmart. ”

We thought it was worth $3B

“the first thing we want to do as a Company is ensure that we are a healthy business long term. And we wanted to allocate capital in a way that ensures that that happens, understanding the realities of short-term and mid-term expectations. But the valuation, which is part about the different strings of value of the Company, we took all that in consideration, the value of Jet, the team, the ability to accelerate our own business, our own ecommerce business and taking that ecommerce business and continuing to do what we do well which is find that intersection between what we do in the stores, what we do at the ecommerce, there is a lot of value in that to us and helping accelerate that.”

Online grocery has been beneficiary of multi-channel

“Online grocery has been interesting. Our customers, we have gotten great feedback from customers on online grocery and it’s because if you think about Walmart, our customer, 90% of the U.S. population lives within 10 miles of one of our stores. So, it is an element of convenience to be able to come to one of our stores and pick up your groceries, not necessarily get the kids out of the car, if you don’t want to stop and pick it up versus waiting at home to get something delivered.”

Wish I had a crystal ball on food deflation

“Yes, I will start with the last part. I wish I had a crystal ball as to where we are with food deflation. It’s been in categories, some categories been around quite a while, meat and dairy specifically, been around quite a while. So, I’d hate to try to predict where that will go. Again, when you look at our assortment, we’ll have probably different opportunities than maybe some other retailers in that with GM and with food, you see different periods of time where you may have inflation in one category, deflation in other category. Food has been fairly significant and we call that out in our earnings releases, but it does give us I think a little better opportunity of how to work with that. ”

Haven’t seen a meaningful change in the consumer

“We haven’t seen a meaningful change in the consumer. I think the consumer generally is okay. There’s things that are working in his favor. whether it’s interest rates, fuel prices, unemployment rate, although that’s pretty favorable for the consumer, I think there’s still probably little bit of hesitancy and that stems even back from ‘09 and ‘10 when people remember a tougher time and that’s why you’re seeing the savings rate go up, you’re seeing people paying down debt. You continue to see a little bit of that. I wish I could predict what fuel prices would be six months from now and how the consumer might react to that. But we haven’t seen that dramatic of a change really in the past, and we’d assume that’s probably kind of where we’ll go in the future.”

Wal Mart FY 2Q17 Earnings Call Notes

Wal-Mart Stores’ (WMT) CEO Doug McMillon on Q2 2017 Results

1.6% comp sales increase

“We exceeded our Walmart U.S. comp sales guidance this quarter, with Walmart U.S. delivering comp sales of 1.6%, driven by a traffic increase of 1.2%. This was our 8th consecutive quarter of positive comp sales and our 7th consecutive quarter of positive traffic.”

Jet will allow us to reach even more customers

“Operating Walmart.com and Jet.com will allow us to reach even more customers and drive a higher level of growth more quickly. One of the things we like about the technology they’ve developed is that it rewards customers in real time with savings on a basket of goods and puts them more in charge of the price they pay. This empowers customers in a way that is true to the spirit of Walmart.”

Jet CEO will be new head of Walmart e-commerce

“Once the acquisition is complete, we look forward to welcoming Marc Lore, current President and CEO of Jet.com. He will join Wal-Mart as our new President and CEO of e-commerce, reporting to me. He will be responsible for both the Walmart and Jet brands in the U.S. Marc is a passionate merchant and innovative thinker who will definitely add value to our business.”

Made advancements on key priorities

” we made advancements in the U.S. on our key priorities to build digital relationships with customers, scale the assortment and expand online grocery. As of June, we have rolled out Wal-Mart Pay nationwide to all stores.”

Brett Biggs

UK comps down 7.5%

“In the U.K., fierce competition and food deflation continue to challenge the market, significantly impacting traffic and comp sales trends. During the quarter, comp sales, excluding fuel, decreased 7.5%. Our strategy remains focused on improving retail basics, simplifying and strengthening the offer through improved availability and assortment discipline, reducing costs through our cost analytics program and driving sales through strategic price investments where we remain committed to the previously announced five-year £1.5 billion price investment.”

Wal Mart at Deutsche Bank Conference Notes

Brett Biggs – Executive Vice President and Chief Financial Officer

Humble beginnings in 1962

“We had very humble beginnings. Our first store opening in 1962 in rural Arkansas and we’ve had tremendous growth as you know since then primarily started in rural America, but we knew our customers wanted more from us. So the next part of our evolution was into our membership clubs. So in the early 80s, we started our membership club business and we opened our first Sam’s Club.”

The supercenter was the greatest invention in retail history

“Then began a real transformation for the Company and that was with the supercenter. So our first supercenter opened in 1988 and was probably the greatest invention in retail history and certainly changed the retail landscape in the United States”

Growth is now about more than growing comps and building stores

“Growth used to be just about we talk about building stores or growing comp sales and it looks different today, it’s still about comp sales and it’s still about building stores, but now it’s about mobile e-commerce, it’s about world-class fulfillment capabilities, it’s about developing new services all with the customer in mind.”

The consumer continues to be a mixed bag

“From a consumer standpoint I probably would have said a year ago, I may have said a year ago actually that the consumer was a little bit of a mixed bag. And I don’t think it’s changed significantly over the last six to 12 months and I’ll speak specifically about the U.S. I think that’s where your question was leaning towards the U.S. There are a number of things when you look at it from a metric standpoint, so unemployment is low. I think you have to look through some of the unemployment numbers, unemployment is low, interest rates are low, inflation is low, gas prices are low. And all of that would say the consumer should feel pretty good about where they’re at and I think the consumer feels okay. We know they’re saving more. We know consumers continue to pay down debt and I think some of that you would say as a holdover from 2008, 2009, 2010 where the consumer remembers they didn’t feel as good back then and I think are taking more opportunities to pay down debt and do other things.”

We always invest in price

“Wal-Mart always invests in price, we’re an EDLP retailer that’s what we’re all about. We save people money so they can live better, so we always invest in price. So it’s not an on/off switch with us on price.”

We’re committed to Africa

“South Africa particularly is going through some challenges from a macroeconomic perspective, but we think the team there is making good adjustments in managing the business well. It’s been a bit of a challenging market particularly over the last couple of years from an economic standpoint, but long-term we believe in Africa.”

Walmart FY 1Q17 Earnings Call Notes

Doug McMillon

Comp sales +1% in US believe its because of improvement in in store experience

“We’re encouraged by the Walmart U.S. comp and believe it is attributable to real improvement in our store experience. Our customers are giving us positive feedback and I’m seeing it myself on store visits and you can see it in the traffic numbers. We delivered comp sales of 1% in Walmart U.S. due to continuing traffic increases which improved 1.5% this quarter.”

Brett Biggs

E-commerce added 20 bps

“E-commerce contributed approximately 20 basis points to the overall comp. In addition, our Neighborhood Market format also delivered a comp sales increase of approximately 7%. We have good momentum in the business as on a two-year stack basis comp sales for Walmart U.S. were up 2.1%. ”

Saw strength in home. Some improvement in consumer electronics

“We saw strength in general merchandise driven by solid sales growth in hardlines, home and seasonal and apparel. While entertainment continues to be a sales headwind, we did see some improving trends in electronics. Branded drug inflation and script growth drove pharmacy sales while better in-stock levels and a focus on the right assortment drove sales growth in both consumables and OTC.”

Positive comps in China despite challenging macro environment

” Despite a challenging macroeconomic environment, strong performance during Chinese New Year, double-digit growth in gift card loading and continued strengthening of fresh categories led to good sales growth and positive comps. In Brazil, despite ongoing economic challenges, our team is making the right decisions to better position the business for both short- and long term success.”