Operator: Our next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.
Simeon Gutman: Good morning, everyone. Judith, congratulations, and to every promotion, congratulations. My question is more medium term. I wanted to ask about the inflection on EBIT dollar growth. At Shareholders’, we talked about how in fiscal ’25, it should or could get better than where we are today, realizing we’re lapping some easy compares from last year right now. Can we hone in on what needs to take place for this EBIT dollar growth inflection? Assuming healthy sales, leverage over fixed cost, Marketplace ramping, is it advertising? Can you talk about sort of what’s in your control and what’s more sales-driven as we think about EBIT growth going forward?
John David Rainey: Sure, Simeon. I’ll start with maybe a bit of a victory lap here. Because the first half of the year has actually been pretty good in terms of the relationship of operating income and sales. We’ve grown the top line at, call it, 6% and operating income at almost twice that. And that’s much better than what we’ve done historically. So we’re very encouraged internally that we’re executing so well right out of the gate after sharing our goals at our Investor Community Meeting in April. As we get into next year, really what you’re going to see is more of a continuation of the strategy that we laid out is we further diversified our earnings streams. A lot of these areas, like advertising and data ventures, these higher-margin businesses are growing at a rate much, much faster than the rest of our business.
And so as you look at the math around that, our margins just want to go up. The other thing is, as you’re well aware of, Simeon, are the efficiencies that come from our supply chain. And so today, we have roughly 15% of our stores that are served by automated regional distribution centers. And when you think about something like an e-commerce FC, that gives us efficiencies of upwards of 30% on things like units per hour. And so as we continue to roll out this automation to the rest of our network, we’re going to see the benefits of that in our P&L. You’re seeing it right now. And it gives us conviction and optimism as we look out over the next several years to be able to grow operating income at a rate that is faster than sales and perhaps appreciably faster than sales.
Doug McMillon: Simeon, this is Doug. I’ll just add on. I think John David said it well, the two threads, the two questions are how is the automation work going? And how is that playing through as it relates to productivity? And that’s a multiyear implementation of these various forms of automated storage and retrieval systems that we’ve talked to you about. And then the second one is how is the business model changing? And the engine for that is what’s the digital percent of total, how is e-commerce growing and what’s the pull-through to advertising and the other components that shape that business model. And the reason I’m repeating it is because I wanted to make the point that it’s not just the Walmart U.S. business that’s going through that transformation.
As I’ve been traveling in International in the last few weeks, the commonality from Canada to Chile, and Judith had that team from Mexico in town this week, what Gui and the team are doing there, it’s very consistent as it relates to how omnichannel retail is coming to life across our company. So I think those are the two threads to keep your eye on.
