Walmart 2Q16 Earnings Call Notes

People have been asking if WalMart can get our magic back since 1996

“I talked with our managers about how our company has always changed to serve customers. And we are in another period of change right now. I shared an article from Fortune magazine that I keep in my office titled “Can Wal-Mart get back the magic.” It’s a pretty strong indictment of our future. And the fun fact is that, it was written in 1996. Just as it was in 1996, we will win the future of retail if we make the right choices as a business. We have a strong point of view on what that future will look like.’

E-commerce adoption internationally

“Internationally one of the encouraging signs we are seeing in Mexico and Canada is that customers are not only purchasing more in our stores, but also driving sales through eCommerce and mobile commerce. In China, we are expanding our Omni-channel offerings with the new test of in-store pickup of online orders in a number of Shenzhen stores. Chinese customers increasingly value the choice of both picking up their online orders in a local store and having it shipped to their homes. And we have started integrating our digital and physical offering for these customers.”

Winning the future requires change, which requires investment that pressures short term earnings

“‘Winning in the future requires change. Change in this case requires investment and investment pressures short-term earnings. Our strategy is designed to create robust and sustainable growth that will deliver return to shareholders.”

pressure on pharma reimbursements, higher shrink and wages impacted EPS

“We have margin pressure from pharmacy reimbursements and higher shrink than we expected during the quarter. These impacts coupled with higher wage investments impacted EPS.”

We have built a talent dense internet technology company inside of WMT

“we have a built talent dense Internet technology company inside of Walt-Mart. We are now able to create new experiences for customers across digital and physical. Overall Global eCommerce constant currency sales grew approximately 16%”

Shrinkage significantly higher than expected

“Additionally, inventory shrinkage was meaningfully higher than planned for the quarter. We are reviewing the end-to-end inventory management process with a special focus on shrinkage and working to close gaps. Investments are being made in training programs store and asset protection associates as well investments in staffing and high shrink areas of the store. But it will take time to see results, so this will impact us versus planned for the rest of the year.”

UK sales decline

“UK sales declined 4.1% and comp sales excluding fuel were down 5.2% driven by declining traffic especially in fresh fruit categories. Grocery and shopping sales continue to grow and we remain focused on driving improvements to our customer metrics. ”

Confident in China growth despite headwinds

“While there are ongoing market headwinds from slow economic growth, we’re are confident we’ll continue to delivery sustainable growth in China. Wal-Mart continues to outperform the market and gain market share in hypermarkets for the tenth quarter in a row.”