Walmart Inc.

Greetings. Welcome to Walmart's fiscal year 22 third quarter earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll now turn the conference over to Dan Binder, Senior Vice President, Investor Relations. Dan, you may now begin. Thank you.

Thank you, Rob. Good morning and welcome to Walmart's third quarter fiscal 2022 earnings call. I'm joined by members of our executive team, including Doug McMillan, Walmart's president and CEO, Brett Biggs, executive vice president and chief financial officer, John Ferner, president and CEO of Walmart U.S., Judith McKenna, president and CEO of Walmart International, and Kath McClay, president and CEO of Sam's Club. In a few moments, Doug and Brett will provide an update on the business and discuss third quarter results. That will be followed by our question and answer session. Before I turn the call over to Doug, let me remind you that today's call is being recorded and will include forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the SEC. Please review our press release and accompanying slide presentation for a cautionary statement regarding forward-looking statements, as well as our entire safe harbor statement and non-gap reconciliations on our website at stock.walmart.com. It's now my pleasure to turn the call over to Doug McMillan.

Hello everyone and thanks for joining us. We continue to have momentum. Sales were strong throughout the third quarter and we've seen a good start to the fourth quarter thanks to all the thoughtful planning and hard work from our associates. In addition to visiting stores and Sam's Clubs in the U.S. this quarter, I also got to visit stores with the Canadian leadership team in the Toronto market. It was a reminder that our associates around the world have served others throughout this pandemic with courage and resilience. Our Canadian stores had some great items for Diwali. We sold through Halloween well, and the seasonal areas were ready for Christmas. In the U.S., we're ready for the holidays too. There's a level of excitement in the air. You can feel it. I've been walking away from these stores with a recurring thought. We're ready. We have the people, the products, and the prices to deliver a great holiday season. Around the world, so many families depend on us for food, apparel, home items, TVs, and seasonal items like toys and Christmas trees. They trust us to have what they're looking for and at the right price. And while this year has its challenges, we're in position to serve them. All segments saw strong top-line gains in the quarter, excluding divestitures, and I could not be prouder of our team. They continued to solve problems and move with speed. Walmart US drove a sequential acceleration in comp sales, both on a one- and two-year basis, and continued to gain market share in grocery. Sam's Club had another very strong quarter, as did Walmart International, with China, Mexico, and India leading the way. Customers and members are shopping with us across channels and we're making it easier for them. Speed matters. That's why we offer fast same day delivery to millions of customers around the world. Walmart has served customers across economic cycles for more than 50 years. Each one is unique and they require us to adapt. In this latest cycle, the pandemic caused shifts in how customers and members shopped and what they purchased. The long period of sustained demand for goods has stretched supply chains, resulting in out-of-stocks and inflation. Fighting inflation is in our DNA. Sam Walton loved that fight, and so do we. I want to thank our truck drivers, merchants, replenishment teams, our associates that move inventory through the supply chain, and our suppliers. They're working together creatively and quickly. We have lots of variables to manage to deliver everyday low prices to customers and simultaneously strong financial results for our shareholders. And we're using them. We continue to make progress on our strategy. The team is moving fast and being aggressive as we build the pieces of our flywheel. In the U.S., Walmart Go Local for last mile delivery is an example. We're excited to have the Home Depot join Walmart and Sam's Club to share our white label delivery as a service platform. This service is powered by our proprietary driver platform, Spark Driver. The technology behind it is now available in Mexico as we learn to build more digital products that can be leveraged globally. Spark continues to grow and is now active in 900 U.S. cities, providing access to more than 50% of U.S. households. And we're just getting started. We recently enabled a new feature within the Spark driver app called Shopping and Delivery, which gives service providers the option to shop and deliver customers' orders. So if delivery slots are full at a location, this feature allows us to serve that demand. The Spark platform has a lot of potential in the U.S. and beyond. Selling advertising is another important piece of the flywheel because it helps suppliers and marketplace providers sell more while creating a new profit opportunity for us. Globally, we continue to see rapid growth in advertising income led by the U.S., Flipkart, and Mexico. We're also making good progress at phone pay, and we're starting to ramp in Canada and Chile. Beyond advertising income, we're creating new ways to gather and analyze data to fuel smarter, faster decision making to better serve customers, members, and suppliers. Earlier this quarter, we launched Walmart Luminate in the U.S., which is a new suite of data products created for our merchants and suppliers to reveal actionable category and item insight. Our sales team is getting started, and we're encouraged by the number of suppliers that have already signed up and their feedback. Our work to become a regenerative company continues. We had an offsite recently with over 50 of our leaders from several countries to imagine what more we can do and how we can pick up speed. Environmental, social, and governance issues are important to us, and we're committed to continuing our leadership. In September, we issued our first ever green bond at $2 billion. It is one of the largest yet from a U.S.-based company. Proceeds are to be used to fund projects like renewable energy, high-performance buildings, and zero waste. While we've been investing in environmental sustainability projects for years, the size and design of this bond is aligned with the bold commitments we've more recently made. We hosted our sustainability milestone meeting in October. Many of our suppliers, NGO partners, and associates attended. We shared a new goal at the meeting to achieve a 15% absolute reduction of our virgin plastic footprint by 2025. We think this goal and others announced at the meeting will move our business in a direction that is good for the planet and good for business by giving our customers the things they love without the things they don't. Now let's move on to segment results. I'll begin with Walmart U.S. Comp sales of 9.2% or 15.6% on a two-year stack is remarkable growth. The gains we've seen in market share for grocery and strong back-to-school results indicate our inventory position has improved. Prices and assortment are compelling, and customers continue to move away from early pandemic behaviors. We see tailwinds in our results. A strong consumer, a degree of inflation, and government stimulus are all factors, but I also like what I see in the core of the business. Transaction counts in our stores and clubs are growing. Inventory is up 11.5%. Our price gaps are where we want them, and we're innovating in the supply chain and adding capacity. And we're building businesses like Walmart Go Local, Walmart Connect, Walmart Luminate, Walmart Plus, Spark Delivery, our Marketplace, and Walmart Fulfillment Services. Financial services is another area where we know we can make a difference in the lives of so many. We recently launched bill payment services in our stores, as well as the ability to load money to a bank account or a prepaid card. Moving to Sam's Club U.S., comp sales were strong at 13.9%, excluding fuel. Membership is the lifeblood of the club model. Growth in membership income of 11.3% is the fifth consecutive quarter of double-digit growth. Membership count reached a new record high during the quarter, and overall renewal rates were strong across the board, including first-year renewals and those for PLUS members. Both individual and business members are shopping with us across channels and using the digital tools we've developed. The new Don't Forget function with Scan and Go is a great example. It's a completely digital way for us to help members and drive basket size at the same time. Based on a member's shopping history, we can target items that a member may be forgetting in their trip all through the app, and we already see an increase in the number of items in the basket. We're also expanding delivery options at Sam's. We now offer same-day delivery for 440 clubs using our Spark driver network. Turning to Walmart International, we had another quarter of strong growth with sales up 10.3% and profit up even higher at 17.5%, excluding divestitures and currency. We ended the quarter in great shape on inventory and price gaps. Back to school and other fall celebrations helped drive traffic for us as families began to get back to normal shopping patterns. The festive season is off to a strong start with big billion days in India. We continue to see strong growth in e-commerce. On a two-year stack, sales increased 91%, led by Flipkart and China. We've talked about the importance of Omnichannel globally, and we continue to see the build-out of these models across markets. Our small Sam's Club depots that extend the reach of our large clubs in China helped deliver e-commerce growth of 96% with incredibly fast delivery for everyday items. In Mexico, we continue to expand same-day delivery, and express delivery orders quickly reach customers using crowdsourcing capabilities. And in both Mexico and Canada, the expansion of Omni capabilities is driven by technology that we've developed to share across markets, further leveraging our scale. Our international markets are building flywheels that have common characteristics with each other and with the U.S., which helps us innovate and leverage the technology we're building. Our store and club formats are well-positioned. We're moving quickly to add and expand more digital businesses, including e-commerce and payments, to create new business models. We're innovating for our customers, like the recent expansion of Flipkart Super Coins across platforms. We're also making important investments for the future while delivering profitable growth today. You see examples of these investments in our supply chain in India and Mexico, new clubs in China, and store remodels in Canada. The team is delivering on its purpose of driving long-term, sustainable growth for the company. With that, I'll close today by thanking our associates around the world for what they do each day to serve our customers and drive results. The holiday season is here, and we're ready. Our teams have been working hard to ensure we have the people, the products, and the prices that will help make this season special for everyone. I'll now hand it over to Brett.