Walmart Inc.

Greetings. Welcome to Walmart's fiscal year 2023 fourth quarter earnings call. At this time, all participants are in 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 to zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Steph Wissing, Senior Vice President of Investor Relations. Steph, you may now begin.

Thank you and welcome to our Q4 fiscal 23 earnings conference call. Joining me today from Walmart's home office in Bentonville are CEO Doug McMillan and CFO John David Rainey. We'll follow a similar format to prior calls, where Doug and John David will share their thoughts on the quarter, year, and year ahead. Following, we'll open a call to your questions. For the Q&A portion, we've asked our segment CEOs to join, including John Ferner from Walmart U.S., Judith McKenna from Walmart International and Cass McClay from Sam's Club. Today's call is being recorded and management may make 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. We are now ready to begin. Doug, over to you.

Good morning, everyone, and thanks for joining us. We're excited about our momentum. The team delivered a strong finish to the year, and as our results in the last two quarters show, we acted quickly and aggressively to address the inventory and cost challenges we faced last year. We built momentum in the third quarter, and that continues. We're well positioned to start this fiscal year. For fiscal 23, we added $38 billion in sales globally, and we crossed $600 billion in revenue for the first time in our company's history. Globally, e-commerce now represents more than $80 billion in sales and over 13% of our total sales. Walmart U.S. grew sales by more than $27 billion. International had another strong year with sales and profit growth of about 9%, excluding divestitures, restructuring, and currency. And Sam's Club U.S. grew sales by more than $10 billion as we delivered double-digit comp growth for the third consecutive year, with membership count at a record high and strong growth in membership income. All three segments have momentum. We're grateful to John, Judith, Kath, and their teams for how they're leading these businesses and showing results. The holidays were strong for us. From Thanksgiving to Christmas to Diwali to Singles Day, our teams were ready. We had aggressive plans, and we delivered. Around the world, the teams leaned into our food and consumable strength, taking share in places like the U.S. and Canada, and delivered a good experience for customers and members in general merchandise. They drove sales and landed the seasons in a very good inventory position when it was all said and done. We ended the quarter with inventory about flat to last year, which is better than we anticipated, and even better when you consider how inflation lifts that number. And they did it while improving in stock levels. I'm impressed with how they brought it all together and want to highlight our store, club, and supply chain associates who handled a lot of volume to make this happen. As we navigated the short term, we also advanced our strategic priorities. Big picture, our strategy is simple. It's to bring our purpose to life for those we have the privilege to serve. We're a people-led, tech-powered, omnichannel retailer that's dedicated to helping people save money and live a better life. That's who we are. Why do we exist? It's to help people save money and live better. How do we do it? By being people-led with clear values, a unique culture, and tech-powered. We're a people business focused on customers, members, and associates. We're constantly adjusting to put the right combination of wages, benefits, and education in place so that our people can build lifelong careers and achieve their full potential. You can start your career assembling bicycles and end up leading all of our U.S. stores. You can start as a cashier and become a truck driver. You can start unloading trucks in a DC and grow to oversee an automated system moving freight through that DC. We provide opportunity, even as we continue to innovate through technology and prepare our business and workforce for the future. One of the things I have always appreciated about this company is that it's naturally hedged. If customers want more of something and less of something else, we shift our inventory. If the economy is strong, our customers have more money, and that's great. If things are tougher, they come to us for value. With today's inflation, we're continuing to see that happen. We're gaining share across income cohorts, including at the higher end, which made up nearly half of the gains we saw in the U.S. again this quarter. And we're also capturing a greater share of wallet at Sam's Club in the U.S. with both mid- and higher-income shoppers. Our goal is for the experience they're having in our stores and clubs combined with our current capabilities for pickup, delivery, and membership to result in them choosing us even as inflation eventually subsides. As we plan this new fiscal year, we've anticipated stubborn inflation in dry grocery and consumables in particular, which will have some mixed impact. We'll stay focused on general merchandise and earn sales in those categories to offset that impact as much as possible. When we think about our business today compared to what it was during prior economic downturns, we now have a more compelling offer, a true omnichannel experience that makes us optimistic that more higher-income families will continue shopping with us across categories because we have pickup, delivery, and membership. And we're improving in categories like apparel and home. Our recently remodeled U.S. stores have a focus in those areas, and the early response from customers is promising. We're also improving our e-commerce assortment and presentation in those categories. We've always been known for great prices, and because of the work we've done around pickup and delivery from stores, clubs, and expanded assortment through FCs, we're increasingly known for the convenience we offer. In fact, our U.S. customer feedback showed strength in price and convenience. Our reputation for price remains strong, and our score for convenience has risen to nearly the same level. Our Walmart Plus members recognize our strength for convenience even more than the average customer. As it relates to our customer or member value proposition, we continue to have a strength with respect to value while we're expanding choice by growing our assortment on Walmart.com and we're improving as it relates to experience. Being an at-scale omni-channel retailer creates unique opportunities to innovate in the area of experience. That includes products like Scan and Go at Sam's Club and a newer in-house conversational AI platform enabling a voice and chat capability being used by more than 50 million customers and an average of 1 million associates across the U.S., Mexico, Canada, and Chile. We're driving a lot of change inside our company. We know where to tap the brakes on costs and inventory. But our focus is more on the gas pedal with respect to our strategic improvements related to assortment growth and our customer member experience. We'll keep shaping the business model by scaling our newer, mutually reinforcing businesses in areas like marketplace, fulfillment services, and advertising. It's exciting to see our global advertising business grow to $2.7 billion for the year we just completed. That's nearly 30% growth. Over the last three years, while our frontline focus was on navigating the pandemic and inflation, we still launched and started scaling new complementary businesses using the technology and expertise we've developed over time. You can see this in some of our recent announcements. The partnership we announced with Salesforce to help scale local fulfillment and delivery solutions for customers on their e-commerce platform is a good example. or our new Walmart business e-commerce sites another, where we're helping small and medium-sized businesses and nonprofits save money and spend less on purchasing the items they need every day. Our fast-growing businesses in India, Flipkart and PhonePay, announced a full separation, which will allow both companies to focus on their own growth paths independently and help unlock value for shareholders. Flipkart has continued to strengthen its market leadership position in e-commerce and is entering this year with good momentum. PhonePay also announced the closing in January of the initial tranche of a fundraise that values the business at $12 billion pre-money. This is more than double the previous valuation just two years ago. And our Sam's Club U.S. team announced expansion plans that will have us opening more than 30 new clubs across the country over the next several years, in addition to a multi-year plan to invest in and modernize our supply chain, especially in the U.S. I'll wrap up my comments today by saying thank you to our associates. I'm grateful for how they continue to step up for our customers and members, and I'm impressed by their creativity and resilience. We've worked through a lot of the operational stress in our business from last year, and we made progress on strategic initiatives as we did it. And we're doing it in a way that's uniquely Walmart. John David, over to you.