John Furner: Hey Robbie, it’s John. Let me start on this and others can jump in. The 4.3% is encouraging, we’re seeing more customers, we’re seeing them more often, we’re seeing a lot of new customers. The frequency, John David mentioned earlier, weekly average customers in the e-commerce up 17% is a strong number. The mix hasn’t changed really all that much. I think if you look at our results by business unit from consumables to food to GM, pretty similar trends than what we’ve been seeing. I think the big difference that we can talk about is, is we see more customers using same-day services and express deliveries, and that’s also across a broad range of categories. That would be intuitive to assume it’s food at times like the example earlier when you’re missing an ingredient.
But we’re also seeing this happen for birthday gifts and general merchandise items and other things. So, I’d go back to what we talked about at the beginning of last year when we talked about supply chain strategy, having a short last mile is an important component in e-commerce and having stores be able to deliver what historically would have been an e-commerce order or a food delivery order or the combination of the two is really helping the brand. And additionally, that’s bringing the delivery costs down, which has contributed to the improvement in operations loss in e-commerce.
Doug McMillon: I think the things you’ve done to make it easier to pick at store level should be mentioned too, RFID and apparel. Having inventory levels down so that people can find things. I think it helped us a lot when it came time to pick toys at the last minute, for example. Our accuracy, — our customer scores reflect that improved accuracy. Combine that with the automation that we’re putting into e-commerce fulfillment centers and you can start to see that there’s a great opportunity for us to leverage math and optimize where things come from, but our accuracy is also improving.
John Furner: It really has, Doug. There are a few things that we’re doing with technology to help us ensure that we know what we own, where it is, and ensure that it’s accessible for the store associates. And I can’t overemphasize the importance of inventory levels being down 4.5% and what that does for a store manager, a team lead, for the coaches that are in the stores who need to take care of what a customer needs right now and they’re able to do that much more accurately. So I think it’ll get better over time as the automation continues to come online, but definitely some notable improvements from the store team this quarter.
Operator: Our next question is from the line of Corey Tarlowe with Jefferies. Please proceed with your question.
Corey Tarlowe: Good morning, and thank you for taking my question. I wanted to double click on technology and talk about Walmart being a people-led and tech-powered company, but specifically as it relates to AI, what is it in the last 12 months that you’ve deployed enterprise-wide that’s worked well for the business and helped drive better returns? And then what is it over the next 12 months that you see that could really help to improve results even more going forward? As I know that that’s been a continued focus for the enterprise broadly. Thank you.
Doug McMillon: Yes. Thanks, Corey. This is Doug, and others can chime in here and help me with this, but we’re very excited about generative AI. There are big opportunities for us to improve the customer and member experience, improve associate experiences and productivity, and help take costs out of business, and we’re moving. I think big picture, we’ve got a very clear plan as it relates to what we want to build versus what we want to leverage from others and we’ve got good partnerships and good advisors and we’ve got a strong tech team that knows what they’re doing in this area. So I do expect that it’ll have benefits. As I talk to other CEOs and we learn here, I think it’s still too early to try and quantify this specifically.
I think as we look back on what develops, we can probably tell you in the rear view mirror how things played out from a cost perspective, for example. But the thing we’re most excited about that’s already happened is the way search has improved. The way generative AI helped us really improve a solution-oriented search experience for customers and members is the thing that we’re most excited about and it happened pretty quickly and it impacted Super Bowl search results. We gave you an example of Valentine’s Day earlier and the team is learning how to do that across all of our markets and the entirety of the company. So that’s also exciting. We also rolled out something we call My Assistant on our Me@Walmart applications so that all of our associates have access to generative AI tools and capabilities.
So strategically, the way I think about it is, the leadership of the companies working through where our biggest opportunities are, prioritizing and resourcing those opportunities. But we’re also making generative AI available broadly so that we get surprising good news from the way that all of our associates interact with it. Anybody else want to comment on that technology?
Chris Nicholas: For Sam’s Club we were really excited to unveil at [CES] (ph) the first of our Sam’s Club’s big consumer facing applications of AI. So our easy exit process, which employs computer vision and AI to allow people to just walk out, is just a really exciting way. And when you watch customers, I was in a club last week watching customers just walk out, members just walk out. And the joy that it gives them, there is some computer vision and AI is making their lives better without them knowing why or how is really exciting. And I think it’s just the beginning of a journey in Sam’s Club. We like to innovate. We have the opportunity to innovate. And we’ll see opportunities for cost out, no doubt. We took 35 million tasks out of the club last year for associates by employing technology.
A lot of that is artificial intelligence that helps them manage inventory better. And we’re working a lot with our members, too, on personalizing how we interact with them. So we replete with opportunities, and I think the important thing is to choose the biggest ones and invest in those.
Doug McMillon: That exit technology still requires a member to scan their items on their app. So Scan & Go is the first step and then you can just leave the building when the transaction is completed. But obviously, eventually we want to remove all of that as part of the process, too.
Chris Nicholas: We do.
Doug McMillon: Thanks for the question.
Operator: Our next question is from the line of Paul Lejuez with Citigroup. Please proceed with your questions.
Paul Lejuez: Hey, thanks, guys. You mentioned rollbacks being up versus last year. Can you quantify that and maybe talk about what percent of those rollbacks are being vendor-funded? How that compares to last year as well? And how that might have also compared to how you operate rollbacks historically? Also I’m curious in which categories you’re most focused on providing those rollbacks? Thanks.
John Furner: Hey, Paul. It’s John. I’ll take that question. This rollback [indiscernible] one of the programs [indiscernible] Walmart format. It’s up around 50% on last year, which is similar to what we reported in the third quarter. As far as categories, it’s pretty evenly spread across the box. If you go back to what we said earlier about pricing, general merchandise is negative by low single digits. So you’ll see a decent number all across general merchandise. The food business has a number that are showing up quite as well. It’s a really key items that we know that our customers have responded to well. We took our French bread back to a dollar, which had been a dollar for a long time and went up as inflation hit the market.
And we’re seeing results of that running about 40% over last year. So customers immediately responded. Rotisserie Chicken is another one. That price has come down by $1. Customers are responding. And as John Davis said earlier, customers are being choiceful. And our customers are smart. And they recognize value really well. So as prices come down and we can show the value digitally or physically, we’re seeing a lot of great responses. As far as the funding, I mean, it’s always going to be balanced. Merchants have a lot of levers in their P&L from their initial margin to how they manage their inventory back to mix. In many cases, you can improve margin by selling items that are higher margin. You can take higher margin items down and move sales to those items, and it shifts the entire mix to the category.
So it’s not as easy as just one simple answer, but the merchants are, as I said earlier, they’re doing a nice job of managing value for customers. They are driving rollbacks and because of strong inventory management, we were able to save markdowns and improve gross margin on product.
Operator: Our next question is from the line of Seth Sigman with Barclays. Please proceed with your question.
Seth Sigman: Hey, good morning, everyone. Just reflecting on the market share gains, a lot of the commentary this past year has been focused on wins with the higher income consumer. Just any more perspective on how that’s been playing out within consumables versus discretionary categories? And how you think about getting that customer really up that spending curve over time. And I guess just related, if you could speak to market share trends, perhaps across some of the other customer segments as well, that would be helpful. Thank you.
John David Rainey: Seth, this is John David. We’re pleased with what we’ve seen in market share gains. In the quarter, we gained share in virtually every category. But notably, one of the biggest contributors in the quarter was in this income demographic from households that make more than $100,000 a year. For general merchandise, as an example, two-thirds of the share gain that we had in the quarter was through this income demographic and digital channels. And what that illustrates, I think, broadly, is that our value for convenience is every bit as much — every grade is what it is for price. And that resonates to people regardless of the size of your paycheck. And so that’s one of the reasons we think that we’re gaining share, our value proposition is resonating with customers and they’re clearly shopping us in new ways versus how they have historically.
Kathryn McLay: I’d also just comment on some of the other markets that we’re into looking at the market share gains that we’ve got really closely correlate with the improvements we’ve seen in MPS as well as price gap. So I think as we look at just being really relevant from a value perspective in markets we’re seeing that the consumer is responding with improvements in traffic and also in market share.
Doug McMillon: There’s so many things Seth in there, but what customers want, they want a great price, they want a great environment, they want value and they want experience. And we’ve been talking about for a couple of years the flexibility that we can offer that we couldn’t or did not years ago. And the stores are a very important part of the e-commerce solution, including delivery, but also picking and at times just being exactly what they are which are great stores that offer those four elements. So remaining flexible can be really important in saving people time. John David mentioned convenience and that is definitely a driver of the results.
Operator: Thank you. At this time, we’ve reached the end of the question-and-answer session. Now I’ll turn the call over to Doug McMillon for closing remarks. Thanks for joining us today. I’m a little concerned that I’m going to be boring in my closing remarks, because we’re becoming quite repetitive. We’re in execution mode and the headlines are, we believe we can grow, we’re confident in our ability to grow because we’re positioned to serve customers and members however they want to be served. We can provide value and we can provide convenience. And underneath the supply chain’s changing to be more intelligent, more connected, more automated. And that’s just going to help us improve execution. From a profit point of view, we can grow profit faster than sales, while investing in our associates, while investing in our business, and having flexibility on price if we need it.
And we’ll do that through the combination of business mix, the productivity delivered by automation. We’re in a great set of countries. We can sell food. We can sell general merchandise, whatever the customer wants in the moment. And then thirdly, we can grow ROI over time. I think we’re investing in the right categories. We’re very clear on the places where we’re investing. We know what the expected returns are there. It’s great to see the automation plans continuing to scale. We’re in a period of time here over the next few years where that’s going to be vital, but it doesn’t last forever and there’s a transition on the other side and it looks quite exciting to us. So I think the combination of growth, profit growing faster than sales and ROI look attractive here and we’ll just keep trying to get better as we execute it.
Thanks again for your time.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and we thank you for your participation. Have a wonderful day.
