Walmart Inc.

Greetings. Welcome to Walmart's first quarter fiscal year 2026 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 on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to Steph Wissing, Senior Vice President, Investor Relations. Steph, you may begin.

Thank you. Welcome, everyone. We appreciate you joining us 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 up the line for your questions. During the question and answer portion, we will be joined by our segment CEOs, John Ferner from Walmart US, 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 of your questions as we can in the hour we have scheduled for this call. As a courtesy to others, 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 and non-gap reconciliations on our website at stock.walmart.com. Doug, that concludes my intro. We're ready to begin.

Good morning and thanks for joining us. I'll start today by thanking our associates. They continue to drive results for today while changing to strengthen our business for tomorrow. We have more than 475,000 associates participating in our Walmart share purchase plan and 81% of them are hourly. For all those associates that are listening, nice job, everybody. For our first quarter, we grew sales 4% and profit by 3% in constant currency. We grew international sales by 7.8%. We drove a Sam's US comp of 6.7%, excluding fuel, and a Walmart US comp of 4.5%. Those strong Q1 results were not driven by inflation. Transactions and units drove our top line. Globally, we grew e-commerce 22% with each segment delivering growth of at least 20%. Inventory's in good shape. So the first quarter was what we expected on the top line. and better than what we expected on the bottom line. It was a good first quarter. There's a lot to like about how we're changing and where we are. We feel great about our team, our strategy, and our stores and clubs. We feel great about how we're driving e-commerce growth in a way that not only serves customers and members better, but reshapes our business model, resulting in a more profitable business with higher returns over time. Delivery speed continues to help drive our business. We'll soon reach 95% of the population in the US with delivery options of three hours or less. For Walmart US, the number of deliveries in less than three hours grew by 91% for Q1 versus a year ago. And in China and India, we're frequently talking about delivery times that happen in minutes. We're confident in our ability to strengthen this business even as we navigate cost of goods changes. Our short and longer-term opportunities are clear. The immediate challenge is obviously navigating the impact of tariffs here in the U.S. Our mindset and approach haven't changed since our investor conference last month in Dallas. I want to thank President Trump and Secretary Besant for the progress made recently. We're hopeful that it leads to a longer-term agreement between the U.S. and China that would result in even lower tariffs. We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure given the reality of narrow retail margins. In retail, managing inventory is always important. In this situation, it's even more important and even more challenging. It's helpful that we're entering the second quarter with well-managed inventory. It's helpful that we're crossing the threshold of profitability with e-commerce globally and that we have these newer, higher-margin businesses growing like membership and advertising. It's helpful that we sell a broad assortment that includes food, consumables, and general merchandise. It's helpful that so much of our assortment is replenishable, which means we can flow it. We don't have to make a one-time call on a quantity. Instead, we can adjust a forecast and partner with our suppliers to adjust quantities over time as we navigate tariff impacts on costs. It's helpful that we have so many talented and experienced merchants and replenishment associates. Treating our suppliers well is a priority. We've worked with most of these companies for many years, and we'll be doing business together for many years to come. So we'll have that longer term mindset as we work together through this year. It's helpful that more than two thirds of what we sell in the US is made, assembled, or grown here. In recent years, our US percentage has grown. Last year, we purchased $296 billion in the United States. And we made a commitment back in 2021 to add another 350 billion in incremental US volume over the following 10 years. We recently announced additional support for US businesses in the form of Grow With Us, which will provide small businesses in the US with the education, training, and resources they need to help them get started with us. You might be surprised to know that nearly 60% of our suppliers in the US are small businesses. We'll also continue to hold our open call event in October, where we invite US companies that aren't doing business with us to introduce their company and their products. That is one of the most fun days of the year for us as merchants. The merchandise that we import comes from all over the world from dozens of countries. Other than the U.S., the other large markets are China, Mexico, Vietnam, India, and Canada. China, in particular, represents a lot of volume in certain categories, like electronics and toys. All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact. The cost pressure from all the tariff-impacted markets started in late April, and it accelerated in May. Let me describe how we think about that and what we're doing about it. First, we wanna keep our food and consumables prices as low as we can. Food prices in the US have gone up in recent years, and our customers have been feeling that all along. We won't let tariff related cost pressure on some general merchandise items put pressure on food prices. But as it relates to food, tariffs on countries like Costa Rica, Peru and Colombia are pressuring imported items like bananas, avocados, coffee and roses. We'll do our best to control what we can control in order to keep food prices as low as possible. An example would be controlling the amount of fresh food waste. In some cases, we're holding our retails where they are despite the tariff cost pressure. Flowers for Mother's Day at Sam's Club US is a good example. When it comes to the general merchandise categories that are impacted, we'll move production where that's possible. That is an easier fast, but we've been working on that for years, so it's not like we've just started to make adjustments. In some cases, we'll absorb costs within a category or department and not simply pass on a tariff cost attributable to each item individually. We'll be managing mix across items, categories and businesses. We also have suppliers shifting materials from tariff impacted components like aluminum to fiberglass where there is no tariff. Our merchants, sourcing team and suppliers are being creative. It's been impressive to watch our team identify opportunities and adjust. As we continue to diversify our profit streams through our e-commerce offering, our marketplace, and membership and advertising, we have some room to absorb costs. We're committed to growing profit faster than sales. There isn't anything about this quarter or anything about this coming year that shakes our confidence about growing profit faster than sales over the term of our long-range plan. The strategy and business model are set up to do that. In summary, the takeaways from my remarks today are, one, we delivered a good first quarter. Two, our strategy and omnichannel capabilities are strong. We'll keep getting better in terms of assortment, delivery speed, and we'll keep scaling our newer businesses. We'll keep driving growth and we'll control what we can control. We continue to be confident in our ability to strengthen this business even as we navigate cost of goods changes. Our short and longer term opportunities are clear. And three, we're positioned to manage the cost pressure from tariffs as well or better than anyone. But even at the reduced levels, the higher tariffs will result in higher prices. The timing of the tariffs and our inventory receipts matters as you interpret our results by quarter. John David will say more about how retail accounting and timing will play out through the year. I'll wrap up my remarks today the same way I opened, by thanking our associates. Our store, club, and supply chain associates are working hard and learning new capabilities. Our home office and tech associates are partnering to manage the short term while building for the long term. We've been operating in challenging environments for years now, and we'll come through this one stronger than ever, just as we have before. We have Associate and Shareholder's Week coming up. It's my favorite week of the year. I look forward to seeing so many of our associates and many of you here in Northwest Arkansas. John David, I'll turn it over to you.