Walmart Inc.

to Walmart's first quarter fiscal year 2025 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 zero from your telephone keypad. Please note that this conference is being recorded. I'll now turn the conference over to Steph Wissing, Senior Vice President, Investor Relations. Steph, you may now begin.

Welcome, everyone. We appreciate you joining us today and your interest in Walmart. Joining me today from our home office in Bentonville are Walmart CEO Doug McMillan and CFO John David Rainey. Doug and John David will first share their views on the quarter, and then we'll open the line to your questions. During the Q&A portion, we will be joined by our segment CEOs, John Ferner from Walmart U.S., Kath McClay from Walmart International, and Chris Nicholas from Sam's Club. For additional detail on our results, including highlights by segment, please see our earnings release and accompanying presentation on our website. We will make every effort to answer as many questions as we can in the hour we have scheduled for this call. As a courtesy, please limit yourself to one question. 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. Doug, that wraps my intro. We're ready to begin.

Good morning and thanks for joining us. Our team delivered a great quarter to start the year. Our results were stronger than we anticipated with sales growth of 5.7% and adjusted operating profit up 12.9% in constant currency. All three operating segments performed well. The momentum we see across the business is driven by growth in units sold and transaction counts, as well as market share gains, including general merchandise. These are not inflation-driven results. In the U.S., like-for-like sales inflation was about 40 basis points for the quarter, including mid-single-digit deflation in general merchandise and low single-digit inflation in food and consumables. Together with our suppliers, we're making progress lowering prices. Our rollback count is up and customers are responding to our price leadership. The first highlight I'd like to call out is the improvement in customer experience scores. That has a lot to do with our associates. I get to visit with a lot of them as I travel. This quarter, I've been in stores and clubs in Johannesburg, Cape Town, Toronto, Nashville, Los Angeles, Austin, Oklahoma City, and Dallas. And before we get too far into the conversation about our performance, I want to thank all our associates everywhere. They deserve all the credit. They're managing the things we've always managed while simultaneously building new capabilities and driving change. Here's what they're doing to drive our business. First, we're providing value. Low prices on quality merchandise are always important to our customers and members. Our combination of everyday low prices plus a large number of rollbacks is resonating. During the holiday, we offered a basket of Easter items with a lower price than a year ago in the U.S. and Canada. Customers responded, and we saw strong sell-throughs. Our merchants are doing a great job, including managing inventory, where we finished down 2.7% globally. Second, we have the selection people are looking for. In the U.S., the number of marketplace sellers grew about 36% for the quarter, with a SKU count now sitting at more than 420 million. In Mexico, the number of marketplace sellers grew by more than 50%, with SKU count up nearly 80%. More often, our customers are finding what they're looking for when they shop our app or site. E-commerce penetration is up in all our markets. Third, we're improving the experience of shopping with us. Our store remodels look good and are performing well. Plus, our curbside pickup and delivery capabilities are improving as indicated by our customer experience metrics. Globally, we completed nearly 70 remodels during the quarter, and we're on track to do more than 900 this year. We're making it more convenient to shop with us, and our customers and members are rewarding us with growth as we save them time. We expect to continue to earn healthy levels of sales growth and simultaneously grow profit faster than sales this year, while managing our price gaps and investing in our associates at the same time. This quarter's results were driven by a combination of strong core performance and the growth of our newer businesses. As it relates to the core, strong same-store sales growth combined with good inventory management resulted in strong profit flow-through. In our newer businesses, advertising and membership were both up 24%. Today, we announced that we're expanding our data analytics and insights product, Walmart Luminate, into Mexico and Canada. Our technology team continues to deliver the innovation that helps us drive our business. We're bringing new experiences to life, like generative AI-driven product search that helps our customers shop more intuitively. The team continues to build and improve the platforms for marketplace and data that we're using across countries, and they're building and improving the operating system that enables us to create a more intelligent, flexible, and automated supply chain. The implementation of our automated storage and retrieval systems in our DCs and FCs is on track, and we're as enthusiastic about the impact of that work as we've ever been. Turning to our segments, in Walmart U.S., we recently announced a new private brand in food called Better Goods. It's our largest food private brand release in 20 years. The brand focuses on today's trends and premium quality. But at the same time, 70% of Better Goods items are priced under $5. This is the type of quality and value that will resonate with customers across income spectrums. We also introduced on-demand early morning delivery to customer doorsteps as early as 7 a.m. and as quickly as 30 minutes. Globally, same-day delivery is available from more than 6,500 locations. In Walmart U.S., over the last 12 months, 4.4 billion items were delivered same or next day, with about 20% of those delivered in under three hours. Delivery times are getting faster, and the cost of delivery is coming down at the same time. During the quarter, we made the necessary but difficult decision to close our U.S. healthcare clinics. There were a number of aspects that were going well, and we really want to be part of the solution to improving healthcare in this country. But the reality is that given reimbursement rates and costs to serve, we could no longer see a path to achieving an acceptable level of profitability, and we're committed to being disciplined with our investments. We're grateful to our associates that worked in this area. They did their part. We'll continue to build our pharmacy and optical businesses, and we'll find ways for our pharmacists to help as they've done with immunizations and vaccinations. Earlier this week, we also shared decisions to eliminate some home office roles and reduce the amount of remote work. The vast majority of our home office associates have been back together in offices since we came back from the pandemic, and we want to see even more of that. Being in person is important. Our culture is stronger when we're together. We make decisions faster, we're more creative, and we help develop the next generation of talent. We'll continue to make changes to ensure we're best positioned to serve customers and support our store, club, and supply chain associates. Moving to Walmart International, we continue to deliver strong results with double-digit growth in sales and profit, lifting our company growth rates. Strength was broad-based, led by Walmex, China, and Flipkart. Results for the quarter included strong growth in e-commerce, led by store-fulfilled orders and marketplace. We saw improved sales growth in general merchandise categories as we focused on celebrations across the world like Chinese New Year, Easter, and Walmart Canada's 30th anniversary. Like the U.S., the international team is improving speed of delivery across markets. Same-day delivery orders in India grew by over 150% in the quarter and is now available across 20 major cities. One-hour delivery in China grew to 55 million orders as customers sought convenience during Chinese New Year. And in Chile, 60% of e-commerce orders are delivered same day. With Sam's Club U.S., it's exciting to see how the team is using computer vision to make it faster for members using Scan and Go to leave the building once they're done shopping. I'm referring to the computer vision and AI-powered exit technology that allows members to leave the club without having to stand in line to get their receipt checked that we announced at the Consumer Electronics Show in January. Since then, we've deployed it in about 20% of our clubs, and we're on track to have it in all U.S. clubs by year-end. In addition to this being better for members, the technology identifies more items than we could with our previous process. This is a great example of people-led, tech-powered, solving for technology that benefits the member experience. It was a strong start to the year. We'll remain focused on improving customer and member experiences, being great merchants, building our newer businesses, and improving returns. With that, I'll hand it to John David to share more about the quarter and our outlook for the rest of the year.