John Furner: Yes. And Chris, this is John. I’ll just build on that. Certainly pleased to see some of the momentum in food and other categories, including unit growth. In the last quarter, there was both traffic and basket expansion, which are both positive indicators. I think John David described well the way we’re thinking about the year cautiously given all the unknowns in the operating environment. But I would just highlight the team here in Walmart U.S. have done a great job expanding our ability to deliver from stores, deliver from fulfillment centers. You heard a bit about automation. So there’s a lot of investment that we feel great about the return possibilities given the experience we’ve had with some of these technologies.
And as you bundle all this together, we’re positioning ourselves well, I think, to be able to grow and continue to grow like we have last few years. Since we merged our e-commerce and store business together just about three years ago in Walmart U.S., we see growth of almost $79 billion, almost $80 billion for the three years. So quite a bit of growth there, and the team is really focused on top line, as you’d expect of a big merchandising organization like this one.
Kath McLay: And if I just pick up on the sales growth, I think we’ve talked quite a bit about the 12 quarters of double-digit comp growth. But if you look underneath that, strength and growth across traffic every single one of those quarters across ticket, our membership income has grown solidly across those 12 quarters. We’ve grown in e-com. We’re growing with scan & go. If I look at the actual membership composition, we’re growing with mid- to high household income groups with share of wallet. We’re growing with millennials and Gen Z as the largest growth area in our membership base And then if I look at market share, we’re growing market share in our club channel despite no opening clubs while our competitors were opening clubs So if you look at that suite of kind of metrics, you look at it and you realize that the value proposition we have at Sam’s is winning, and it’s resonating with our member base, and it’s resonating with new members.
And so we are looking at growing both in fill-in opportunities as well as into new geographies where we don’t have as a larger presence. So we’re excited about opening clubs. It will take us a minute to build up that pipeline, but we’ve already got some exciting areas we’re looking at.
Operator: Next question is from the line of Michael Lasser with UBS. Please proceed with your question.
Michael Lasser: On this call, there’s been a few different references to an algorithm to 6% top line growth compounded over the last few years to growing operating income faster than sales. Previously, we were under the expectation that Walmart was managing its business over the long term to a 4% top line growth and greater than 4% operating income growth. It’s going to fall short of that this year. Is it still a realistic expectation that Walmart is managing the enterprise to that 4% top line, 4.5% — better than 4.5% operating income growth number? And is it reasonable for that to kick in as early as next year?
John David Rainey: Michael, this is John David. Good to speak with you. Yes is the short answer. It’s absolutely realistic to assume that. But when we put out multiyear targets, they’re not designed or not intended to suggest that we can hit that in any economic environment in any year. And so, we’re certainly, our guidance this year reflects some of the pressures that we see broadly in economies around the world. But we’ll be able to give more insight into both our top line and bottom line in terms of what we anticipate over the next several years at our Investor Day, April, but we absolutely 100% believe that we’ve got a business that can drive that kind of outcome where we’ve got sales growing at 4% or higher, frankly, as well as operating income outpacing that.
Again, it goes back to my earlier comments around some of the investments that we’ve made, not only in our supply chain, but in investing in our associates and some of our technology that really put us with a — give us a footing to realize some of these results of margin expansion and outsized growth in our bottom line over the next several years.
Doug McMillon: Oliver, this is Doug. I’ll just second what John David said and then call out this last five years’ performance again and say, 6% and 3%, 6% top line, 3% bottom line is obviously not forward for. But we don’t feel too bad about the six. And we just wish that, that three was a 6.1, and we’d be in really good shape. So we don’t know exactly what the external environment is going to enable us to do. But because this business is based on value and has a breadth of categories, we are positioned to do well relative to the market regardless of what happens in the environment. And as we’re doing it, as you’ve heard us say for a long time now, we’re changing the business model so that operating income can grow while still having low prices, do both at the same time. That’s what we’ve set ourselves up to do, and we’re making progress at that, and you can see it in the results in the pieces that we’ve shared with you already.
John David Rainey: If I can just say one more thing, Michael, what we’re fundamentally focused on is growing the absolute dollars of free cash flow each year. It’s when we look at the composition of our business and how it’s changing and the returns related to some of these initiative areas, it’s just such that the financial architecture suggests that the operating income should outperform sales growth over the next several years. But fundamentally, we understand what creates value for shareholders, and we’re focused on growing the absolute dollars of free cash flow.
Michael Lasser: And just to clarify that, John David. To the extent that you do better, especially in the U.S. business this year, should your incremental margin on that upside be consistent or better than it’s been historically given you’ll be lapping COVID costs, a lot of inventory disposition and other factors that shouldn’t repeat this year.
John David Rainey: Yes, it’s a good call out. I appreciate the opportunity to address that. You’re right. If you look, particularly for the U.S. business, the incremental margins will be higher year than what you typically see, and in large part for the reason that you mentioned, we’re lapping like even in the last quarter, we lapped $500 million of COVID costs alone in that quarter, but when you look at it on a full year basis that creates a tailwind in terms of incremental margins.
Operator: The next question is from the line of Kate McShane with Goldman Sachs. Please proceed with your question.
Kate McShane: We were just wondering with regards to the promotional environment, within grocery. Are you still finding the promotional environment rational? Are there any areas that maybe aren’t as solid as others? And I think you’ve alluded to this on the call today, but your view on the need for price investments in food going forward and the possibility of that being incorporated in your guidance for this year?
John Furner: Kate, it’s John. Thanks for the question. First, I’d just anchor what we’re doing in the purpose of the Company is to help people save money and look better. So we’re constantly thinking about making sure that our values are appropriate, given what’s going on in the relative marketplace. And as Doug alluded to earlier, we’re encouraged by the price positioning relative to the market, and we’ll continue to work on that. Externally, I wouldn’t call it any major shifts in what we’re seeing in terms of promotion. There has definitely been a shift, and we see this internally as well and an acceleration in the fourth quarter to more private brand versus branded product. That shift really began last March and continued all year, and the fourth quarter got a bit stronger.
We don’t set targets for branded versus private brand, and we want to be there for any customer and make sure that quality and value are right across all product lines, but there is definitely some acceleration to private brands in the last 90 days.
Operator: Next question is from the line of Paul Lejuez with Citigroup. Please proceed with your question.
