Walmart Inc. (NYSE:WMT) Q2 2024 Earnings Call Transcript

Page 9 of 11

We like it in terms of the way we can serve people, whether its curbside or its delivery or it’s in a store club. So our job is to grow our share to win through the customer value prop, which is price, assortment, experience and trust. And whether that’s in Mexico or the United States, that’s the position that we put ourselves in, and we just need to execute against that. On shrink, John, you can comment too, but I’d just remind everybody, from a total enterprise point of view, we’re more than a domestic retailer. And we’ve got 19 countries. We’ve got Sam’s Club. We’ve got a variety of businesses. And so, it’s not necessarily the same answer as maybe some of the others that are in the news of our shrink.

John David Rainey: And Doug, I’d add that, of course, shrink is an important part of margin, but there are many parts of margin that are important to be able to deliver for customers. And the first is, we want to make sure that we’re pricing as low as possible. So customers find the greatest value that they can possibly find. Shrink has increased a bit this year. It increased last year. It’s uneven across the country. It’s not in every market. Some markets are higher than others. But we do have the tailwinds that we mentioned earlier, which are cost of supply chain and markdowns from last year. So lot components go into this. We’ll keep watching it. We don’t want it to go up, obviously, because it could cause prices to rise, and we’ve heard that across the market, but it is a part of what we’re managing and the team is doing a nice job with value, and the team is doing a nice job managing the margin in total.

Doug McMillon: Shrink is comprised of more than one thing. That’s part of it. And we do think that in some jurisdictions here in the U.S., there needs to be action taken to help protect people from crime, including theft. The other part of Shrink is more controllable, and we stay focused on that as a priority.

Operator: Our next question is from the line of Krisztina Katai with Deutsche Bank. Please proceed with your question.

Krisztina Katai: Hi. Good morning. Thanks for taking our question. And I’ll add my congratulations to Judith as well. I have a question on Sam’s Club. I think I heard you say in the single-digit member growth within the quarter. So can you talk about your membership gains and the momentum that you have been seeing in the business as well as the renewal rate? And how you think about membership value for the consumer in the face of moderating food inflation? And then secondly, if I could just ask on the private label penetration that is still increasing. Just how are you generally anticipating volumes to play out in the back half of the year between your private brands versus your national brands as rollbacks are increasing? Thank you.

Kathryn McLay: If I start – is just talking about the member health. We’ve seen historic growth in our membership base over the last few years, and we continue to see growth in absolute member numbers. Our tenured renewal rate held, so it did an increase or decrease it held from quarter-to-quarter. And we are continuing to look at different ways to introduce people to the value of our Sam’s Club membership. And so, you’ve seen us over the years, try a couple of different things. On our 40th year birthday, we had a great price for new members. Really, that’s just an opportunity to invite people in, to experience for themselves the value of membership looks like, and then we want to turn them into a tenured renewal member going forward. So, we feel strong about the health of our membership and the growth that we’ve seen.

Page 9 of 11