WMT Walmart Inc. · Q1 2026 Earnings Call

15-May-2025

(WMT)

Q1 2026 Earnings Call

Total Pages: 23

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Senior Vice President & Head-Investor Relations, Walmart, Inc. President & Chief Executive Officer-Walmart US, Walmart, Inc.

President, Chief Executive Officer & Director, Walmart, Inc. President & Chief Executive Officer-Sam's Club, Walmart, Inc.

Chief Financial Officer & Executive Vice President, Walmart, Inc.

.....................................................................................................................................................................................................................................................................

2

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Operator: Greetings. Welcome to Walmart's First Quarter Fiscal Year 2026 Earnings Call. At this time, all

Senior Vice President & Head-Investor Relations, Walmart, Inc.

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's CEO, Doug McMillon; 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.

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%. Though strong Q1

results were not driven by inflation, transactions and units drove our top-line.

3

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Globally, we grew eCommerce 22%, with each segment delivering growth of at least 20%. Inventory is 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 eCommerce 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 US. Our mindset and approach haven't changed since our investor conference last month in

I want to thank President Trump and Secretary Bessent for the progress made recently. We're hopeful that it

leads to a longer-term agreement between the US 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 eCommerce 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 the 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.

4

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

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 US, 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 want to 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 from Mother's Day at Sam's Club U.S. 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 eCommerce 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.

5

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

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 in 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 Associates and Shareholders 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.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

Thanks, Doug. Our first quarter performance demonstrates the strength of our business and the relevance of our

omni-strategy in the context of a highly dynamic backdrop. I'm pleased with the continued sales momentum

across the company, and it speaks to the competitive advantages that set us apart in the retail marketplace.

Our commitment to delivering value and convenience to our customers is resonating more than ever. At the same

time, we're driving progress in high-growth areas like advertising, membership and marketplace services.

Our April results were better than we had expected, particularly in Walmart US. Sales across segments improved

as the quarter progressed, including strong Easter seasonal events; and our teams did a nice job managing

inventory and controllable expenses, leading to a stronger than forecasted performance in both gross profit and

SG&A.

Consolidated revenue increased 4% in constant currency despite lapping last year's leap day, driven by strong

growth in eCommerce of 22%. Currency headwinds reduced reported sales results by $2.4 billion, or 150 basis

points of growth. Walmart US comp sales grew 4.5%, aided by strong eCommerce sales growth of 21%.

Momentum in grocery sales continued with a mid-single-digit comp and ongoing share gains. Health and wellness

sales increased high-teens, reflecting higher prescription volumes and over-the-counter sales, while general

merchandise sales declined slightly with softness in electronics, home products and sporting goods. We're

focused on value and managing our relative price position, while also saving customers' time with our

eCommerce options.

In Walmart US, we have more than 5,000 price rollbacks across our assortment, and we've seen private brand

sales outperform with grocery private brand penetration up 60 basis points versus last year.

Our International business grew sales 7.8% in constant currency, reflecting strength in China and Flipkart.

eCommerce was strong with double-digit growth across markets, led by pickup and delivery and marketplace.

We're increasing speed of delivery for customers. In international, items delivered same or next day increased by

35%, with about 45% of those items delivered in under three hours.

At Walmex, lapping last year's government stimulus payments, the Easter shift and some early quarter softness

tied to a weaker and uncertain macro environment led to slightly softer sales than anticipated. We're encouraged

by the pickup in business more recently with sales back in line with our expectations.

Sam's Club U.S. comp sales ex-fuel increased nearly 7%, with strong growth in transactions, including strength in

Member's Mark. eCommerce grew 27%, led by triple-digit growth in club-fulfilled delivery and double-digit growth

6

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

in pickup. Member's value the convenience of Scan & Go and their usage of this tool continues to grow, with

penetration increasing 600 basis points versus last year. Over 50% of our members now transact digitally in some

form with Sam's, online or using digital solutions in Club.

From a margin standpoint, consolidated gross margin increased 12 basis points due to better-than-expected

results at Walmart US, partially offset by lower-than-expected results in International which saw increased

pressure from channel and format mix changes. Gross margins in Walmart US increased 25 basis points,

reflecting continued disciplined inventory management, including a lower level of markdowns and improvements

in business mix that have offset increased pressure from merchandise category mix.

As our business model evolves, contributions to profitability are increasingly influenced by a diverse set of drivers,

including improved eCommerce economics and business mix. We achieved eCommerce profitability, both in the

US as well as for the global enterprise in Q1 for the first time, an important milestone for our company.

In the US, eCommerce net delivery costs have declined as we've continued to densify our last-mile deliveries and

as customers pay fees for faster delivery. Business mix, most notably from higher-margin areas like advertising

and membership fees, also contributed to the improvement in Q1 profitability. Our advertising business across

markets increased 50%, including VIZIO. Walmart Connect in the US, which doesn't include VIZIO, grew 31%.

Sam's Club U.S. ad business was up 21%, and we saw 20% growth in our International markets, led by Flipkart.

Membership fee income was up nearly 15% across the enterprise. In the US, Sam's Club continued to see steady

growth in member counts, renewal rates and increased penetration of Plus members, resulting in membership

income growth of 9.6%, while Walmart+ membership income grew double-digits. Within International,

membership income from Sam's Club China grew more than 40%, as member counts continue to increase.

SG&A expenses deleveraged 6 basis points, including the benefit from lapping last year's business reorganization

costs. As expected, International and Sam's Club U.S. expense deleverage reflects planned investments in

associate wages. Walmart US deleverage reflected increased depreciation expense as well as VIZIO operating

costs post-acquisition.

As we previewed at our Investor Day, we experienced higher-than-expected casualty claims expense. We're

accruing a higher rate for claims cost based on the industry trends that point to higher risk adjustment factors. We

expect this trend to persist for at least a few quarters.

Adjusted operating income was better than expected with growth of 3% in constant currency and adjusted EPS of

$0.61 was higher than our guided range. Importantly, our inventory is at a healthy level, up 3.8%. That's obviously

as important as ever, as we head into a tariff-impacted period where cost pressures will impact item pricing and

make it more challenging to anticipate demand by item. This is a highly fluid situation, and we'll need to manage

quantity decisions as we measure the price elasticity of impacted items.

I'm grateful that we have a team of experienced merchants, various levers we can pull and the tools available to

manage this in a thoughtful and proactive way. Our cash position provides the flexibility we need to lean into

opportunities to grow share, while also continuing to invest in areas with long-term strategic value such as supply

chain automation, store growth, remodels and tech.

In April, we completed an approximately $4 billion debt issuance at attractive terms. We continue to expect FY

2026 CapEx to be in the range of 3% to 3.5% of sales. During Q1, we repurchased $4.6 billion in stock, an

7

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

amount equivalent to our share repurchases for the entire year last year. We have a lot of confidence in our

business, and we'll continue to be opportunistic with buybacks if share price dislocations occur.

Now turning to guidance. As a matter of practice, we provide an update on our full year outlook at the end of the

second quarter, if appropriate. But I'd like to give some color on how we're thinking about the impact from tariffs.

I want to start with reiterating our message from our Investor Day in early April. We have a lot of confidence in our

strategy, and there is nothing about this current period that makes us feel differently about anything we previously

said about our long-term financial framework to grow annual sales about 4% and operating income faster than

sales.

We've seen during periods of economic uncertainty in the past, we tend to gain share and come out of the other

side in an even stronger position. We expect this period to be no different. We'll play offense and may

opportunistically invest in areas to improve our value proposition, but we're not fully immune from the financial

impacts in the short-term.

We've done work internally to model various scenarios related to the ongoing trade policy discussions. These

scenarios involve making assumptions about how long tariffs persist at certain levels versus coming down to

some lower level once bilateral trade deals are completed.

We also must make assumptions about the elasticity of demand as well as the overall macro backdrop in this

environment. Perhaps it's obvious, but worth stating, the range of possible outcomes is much greater than when

we originally provided our annual guidance. That said, in what we believe are the most likely scenarios that we've

modeled, we still have the ability to achieve our full year guidance for both sales and operating income.

These scenarios involve the belief that trade policy discussions will result in bilateral agreements, agreements in

principle for the existence of good faith discussions moving toward agreements that could result in tariff levels

lower than those initially proposed in early April. However, if we see a restoration of dramatically higher tariff

levels, the impact on our financials could be significant and even jeopardize our ability to grow earnings year-

over-year.

In any case, we're comfortable with our ability to grow sales in the range we've guided for the year, though the

mix of AUR versus units may be much different in these scenarios.

While the swings from quarter-to-quarter could be large, we still think we can achieve our operating income

guidance for the year given what we know and our assumptions that I referenced.

Should more progress on trade in the next several weeks be favorable, there could be upside. If elevated tariffs

remain in place for an elongated period, there would be downside risk. We will know a lot more in a couple

months, but we are equipped to manage this as well or better than other retailers.

Turning to the second quarter, the operating environment is highly fluid, and it makes the very near term

exceedingly difficult to forecast. The level and speed at which tariff-impacted prices could go up is more extreme

than in normal periods.

The US is by far our number one market for sourcing. For the less than one-third of what we sell in the US that's

imported, China, Mexico, Canada, Vietnam, and India are our largest markets.

8

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

As Doug noted, we're encouraged by the recent trade negotiations especially concerning China. The level of

tariffs that result from those discussions and the timing of when they ultimately become final may cause larger

swings in our financial performance from one quarter to the next.

Moreover, there are two specific accounting methods that make these swings more difficult to forecast. I want to

take the time to explain these because they may impact the second and future quarters given cost pressures

caused by tariffs.

The first relates to our method of accounting for the cost of inventory for the majority of our US business: the

Retail Inventory Method, or RIM for short. We've always used RIM in Walmart US. It's not new for us, and it's a

common method of accounting in the retail industry. RIM accounting implies a ratio of the actual cost of the

inventory to its retail price to calculate ending inventory and therefore derive cost of goods sold. As prices go up,

this can result in the potential for markups on our inventory and increased merchandise margin gains relative to

periods of more constant price levels.

To the extent that later markdowns need to be recorded, it can have an offsetting effect. The magnitude of these

swings both positive and negative given the level of additional costs that could be applied to the inventory that

we're purchasing right now are unprecedented in our business and could result in swings in margin and earnings

by quarter.

The second is the possibility of LIFO-related charges as prices go up, which we experienced in Sam's Club U.S.

during a sustained inflationary period in FY 2024. We currently expect that sales growth on a constant currency

basis will be in the range of 3.5% to 4.5% for the second quarter, though the composition of sales through AUR

versus units may be different than what we expect today.

Notably, if current exchange rates were to stay where they are right now for the entire second quarter, we would

expect a headwind of approximately 120 basis points to reported sales growth.

For operating income, the range of outcomes for the quarter is much wider. The information related to the trade

discussions taking place is changing by the week and, in some cases, by the day. Importantly, we also want to

provide flexibility for us to play offense in this environment.

And lastly, our method of accounting for inventory could have a larger impact on our earnings than in normal

quarters. For these reasons, the range of outcomes for the quarter is so wide that it would be impractical to

provide a range of operating income guidance that investors could credibly rely upon.

I want to encourage you to think about the next couple quarters in the aggregate. We may experience larger gains

related to markups in the second quarter, and some of those may be offset by markdowns in the third and fourth

quarters. This is why we've underscored the importance of managing inventory well in this environment.

In total, though, we believe that we can still achieve our operating income guidance for the year.

In closing, as we look ahead, while operating conditions are expected to remain dynamic, our strategy is clear.

Our top-line momentum is strong, and we're flexing into our advantages to protect margins as we grow. History

tells us that when we lean into these times of economic uncertainty, we emerge on the other side as a stronger

company. We expect this time to be no different.

We appreciate your interest in our company and are now ready to take your questions.

9

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Hey. Thank you, guys. Thanks for all the detail on your pricing philosophy tied to tariffs, very helpful. My question

is on eComm, big milestone for the company, achieving profitability in the eComm business. Just curious what

finally got you over the hump, and where to from here in terms of where margins in that business can go relative

to the rest of the business? And what do you see as the key drivers of further improvement to eComm profitability

from here? Thanks.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

Paul, thank you for your question. This is John David. Let me start with just giving a little bit more detail on the

global eComm profitability. We noted that we achieved it on an enterprise basis globally as well as for the US

segment.

And so, if you were to break that down by segment, the US was profitable; Sam's was profitable; and the

International was slightly unprofitable. But if you take all of those together, we had a profit for the quarter. So

we're really pleased with that.

There are a few things that have driven the performance, notably in the US, and John will talk more about this, but

one is the densification of our network. And what I mean by that is, we have more customers that are coming to

Walmart now and taking advantage of our eCommerce offerings.

We're able to spread those deliveries over multiple households. So, think about the opportunity to deliver a

package to five houses on a street versus one house on a street. And so as we grow, we continue to spread

those costs over more volume.

The second is delivery cost. And this is where John and his team have made a tremendous amount of progress in

reducing the unit cost and this is a lot of the supply chain infrastructure that we've implemented. But part of that,

too, is the willingness that customers have shown to be able to pay for expedited delivery. And what I mean by

that is delivery within one hour or within three hours.

We noted in the last quarter that fully a third of our customers are taking advantage of that option. And it shows

the relevance of convenience. We've seen an uptick in that even in the most recent period. So John, maybe you

want to add a little bit more. But to me, those are a couple of things that stand out to help improve the profitability.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Yeah. Thanks, John David. Paul, a few things. If you look back over the last few years, I think it's a combination of

investments we made for about the last decade. And those investments would include, getting our applications to

a single app; building new fulfillment centers; enabling stores to be part of the omni solution; the speed of delivery

has been encouraging the last year, our sub-three-hour deliveries are up about 91% year-on-year.

10

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

John David mentioned also the scale of the operation. It has taken a number of years, but we're pleased with the

progress in the growth. We've been running 21% growth for multiple quarters in a row.

For customers, in particular, what the team has done that I've been really impressed with is providing customers

flexibility to serve customers when they want to be served the way they want to be served. So a Walmart

customer can shop at the counter, they can shop with curbside pickup, we have in-home delivery. Our first and

third-party delivery options, including fulfillment services for our sellers has been on a strong growth rate for the

last few years. And that has resulted, as John David said, lower delivery costs due to density and frequency.

All of that put together has enabled us to – has helped us enable business mix with advertising our data

businesses. And when you put it all together, just really proud of the team to be able to sit here today and

announce a quarter of profitability for the first time, as we told you just a month ago, we were together in Dallas.

And importantly, the team has exited the quarter with momentum. There was a strong April.

We had a strong Easter. Our omni capabilities enabled us to deliver floral and other things that people need last

minute for the Easter holiday and Mother's Day. So, we'll keep working on better ways to serve customers,

improving speed, improving density, and working efficiently across all the channels.

.....................................................................................................................................................................................................................................................................

.....................................................................................................................................................................................................................................................................

Operator: Our next question comes from line of Simeon Gutman with Morgan Stanley. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Hey, good morning, everyone, and good quarter. So, Doug and John David, you both touched on this. You built

this business and financial model now that your margins could go up and invest faster for growth at the same

time. I've asked you in the past about like the toggling that balance.

And I kind of heard some of the prepared remarks on this, I'll push back and say, why not toggle it in favor of

investments even more in this environment. We know how much – how important it is getting more gross profit

dollars, especially in gen merch, why not lean into there? And you said it yourselves, Walmart should be better

positioned than most to navigate this environment? Thanks.

.....................................................................................................................................................................................................................................................................

Yeah. Thanks, Simeon. This is Doug. I'll go first, and then John David can comment. I think with our guidance

where it is for the year, we positioned ourselves to be appropriately aggressive. I think as the quarters play out,

we may make different choices depending on what's happening with pricing. It is fluid. We're watching what's

happening with cost of goods. There are a lot of moving parts as it relates to merchandising these days.

And as it relates to the retail prices, we'll watch where our price gaps are, but we'll also watch what customers are

telling us and the response that we get from them and the pressure that they're feeling. So the bottom line is, if we

need to invest more, we can.

11

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Having said that, I really want to grow profit faster than sales. Like we've been working on this for a long time. I

think we deserve that. You guys deserve that. And we can navigate this in a way as we balance all the interest

between customers, shareholders and everyone else such that we can keep prices low enough to help people

and grow profit faster than sales. That's what winning looks like to me.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

I would underscore the points that Doug made. I feel, Simeon, that we are striking the right balance between

investment and growing profits. If you look over the last two years, we grew operating income about 10% on

average. Our guidance is, let's call it, roughly half of that this year. And so, this is a year of investment. But even

while doing that, we are hopeful to be able to grow profits faster themselves. If there's, to me, a story about the

quarter from a financial perspective, it's really one of the diversification of our income streams.

And so, you're seeing all these things play out. If you were to just take advertising and membership as an

example. That's a quarter of our profits. Membership was really strong in the quarter, we grew each segment,

membership double-digits, International was north of 20%. So, you're seeing this diversification of our income

streams that allows us to continue to take a very long-term perspective and invest in this business. So, these are

always a little tricky in terms of what – striking that right balance, but we like the plan that we have right now is the

right one for us.

.....................................................................................................................................................................................................................................................................

.....................................................................................................................................................................................................................................................................

Operator: Our next question comes from the line of Christopher Horvers with JPMorgan. Please proceed with

your question.

.....................................................................................................................................................................................................................................................................

Thanks. Good morning, everybody. So, I wanted to ask a question about the consumer and the upper and lower

end. You called out strong gains with upper income households. Is that coming through on the eCommerce side

mainly in addition to what's going on in the store?

And then, on the other side, there's been a dialogue in the market that maybe the lower end consumer is getting

weaker and seeing some incremental pressure and perhaps leading to some bottom-of-funnel loss where they're

trading out of Walmart to lower sort of unit, lower average cost locations and doing smaller shops. So, can you

talk about what you're seeing on both sides in terms of the health as well as the share performance? Thank you.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Christopher, it's John. I'll first anchor on comments that John David made earlier this morning which are that

customers, in some cases, we've heard of some concern, they remain choiceful and consistent. And we continue

to see customers prioritizing value and speed of delivery. We have seen growth across all income cohorts in the

quarter.

12

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Fortunately, and I'm proud of the fact that in April we saw a number of new customers and probably – it's probably

a good time to remind you just the shape of the quarter in terms of the calendar. This is a calendar where we had

leap year last year and then we had a very late Easter. So, February was softer than we expected.

March was back to normal, and we exited the quarter with a very strong April, including a strong Easter holiday

which is a reminder that customers are prioritizing seasonal events, getting together, having meals at home. And

importantly, we want to be very flexible for our customers. If customers choose to shop in store, we want to have

a great store experience. We're very pleased with our remodel program. We continue to see accelerated results

and high NPS scores after remodel.

Our fast delivery scores are some of the highest scores that we have in the company. And over the course of the

rest of the year, you will continue to see us expand our capacity and capability to deliver from FCs quickly,

including same day, next day and two days. And we are growing our fast delivery options almost 100% year-on-

year. You heard that this morning, growing 91%.

So, we'll continue to focus on value with great products and meat produce, our better goods line, really proud of

the progress in apparel. Toys has had a strong quarter, particularly the holiday. And then we'll remain very, very

flexible for our customers as we move throughout the year.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Sam's Club, Walmart, Inc.

I think from a Sam's Club point of view, I underline everything that John just said. Right now, I think we're leaning

into the power of the model of the membership warehouse retail model. We have incredible prices because we've

curated items for members. And what we find is that this resonates whether you're earning a lot of money or

whether you're working through how you spend your money each toward the end of your pay packet.

We're seeing growth in convenience. We really see that convenience is something that resonates for everybody.

And in fact, what we give them back is the power of time. So if we make things easier for people, they have more

time, and that's incredibly valuable to people. So I would just close by saying that the growth in our membership,

the 10% growth in our membership income is driven by more people renewing more new members and higher

mix of plus participation, and we're seeing that across all of our income cohorts.

.....................................................................................................................................................................................................................................................................

Operator: Our next question is from the line of Peter Benedict with Baird. Please proceed with your question.

.....................................................................................................................................................................................................................................................................

Hey, good morning, guys. Thanks for taking the question. So mine's kind of on capital allocation. You talked about

CapEx, 3% to 3.5% of sales. Sounds like that probably trends towards the upper end of that range this year. I'm

wondering if you could frame where we stand with the automation investment and the spend on that front?

Should we be thinking CapEx in dollars is kind of at a peakish level here, at least for the intermediate term? And

then, on the buyback, great to see. In the first quarter, it looks like you spent, as you said, more than last year but

also more than two years ago. Any way we should be thinking about that going forward and your willingness to

commit more to buy back? Thanks so much.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

13

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Sure, Peter. Thank you for the question. On capital allocation, I'll start with CapEx. The right way to think about

that level for our business is in the 3% to 3.5% of sales. So, that should grow with revenue as we go forward. It

may vacillate a little bit between the top end and the bottom end of that.

But given what we know and the opportunities that we have to drive improved returns through some of this

investment, we're not shying away from this. We're taking a very long-term perspective even in this current

operating environment where we see some of those costs are coming in higher.

We look at capital allocation as every dollar has to fight for its highest return. And this is one of the best ways that

we can spend a dollar. That said, we saw significant price dislocation in the quarter as some of the uncertainties

filtered through the market. And we are very aggressive in our share buyback. As I noted, buying back more than

we did in the entirety of last year. And we'll continue to do that as we see price dislocation because we have a lot

of conviction in our strategy. We have a lot of confidence in the plan that we have, and we believe there's a lot of

shareholder value to be created here.

And so as we see these types of dislocations, you're going to see us be more aggressive. I think it's fair to say,

obviously, we're going to use – we're going to spend more in share buyback this year than we did last year, given

that we've already done that one quarter into the year. The total amount of that is to be determined. We'll see

where prices are. We need to balance this with both increasing our dividend as well as investing in ourselves

through CapEx.

.....................................................................................................................................................................................................................................................................

Operator: Our next question is from the line of Brad Thomas of KeyBanc Capital Markets. Please proceed with

your question.

.....................................................................................................................................................................................................................................................................

Thanks. Good morning. The Walmart Connect growth was particularly impressive this quarter and showed some

acceleration for you. I was wondering if you could comment a bit more on the strength in advertising? And any

incremental learnings you've had so far as you continue to integrate VIZIO? Thanks.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Hey, Brad, it's John. We had a good quarter with Walmart Connect, as you mentioned, up 31% year-on-year and

also a strong quarter around the world and the other advertising businesses that we operate. We're in the initial

stages of integrating VIZIO. I'm excited about the plans we have for VIZIO the rest of the year. It's a great

operating system, very frictionless, easy to sign up, and we're looking forward to the contributions of the VIZIO

team going forward.

In terms of the core advertising business, we've had strength with the growth of advertising with our marketplace

sellers. Our GMV and marketplace has been very consistent in the mid- to high-20s. Last quarter was in the mid-

20s as well. We also have had continued strength with first-party and third-party suppliers. So it's a broad mix of

capabilities.

Additionally, this quarter, we launched pharmacy delivery, and that's another opportunity for our customers to

enjoy the flexibility that we offer. And so there will be new opportunities, I think, as we go forward and look ahead.

But in general, we're really pleased with the progress, the momentum, and the team that we've established at

14

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Operator: Our next question is from the line of Michael Lasser with UBS. Please proceed with your question.

.....................................................................................................................................................................................................................................................................

Good morning. Thank you so much for taking my question. John David, in your remarks, you said if elevated

tariffs remain in place for an elongated period, there would be downside risk. Now, you guys are astute poker

players and probably will not clearly define what elevated tariff rates are. But would you consider the current level

of tariffs to be elevated, meaning that there could be downside risk if they don't come down?

And more importantly, over the long-term, is there anything about this tariff situation that would existentially

impact Walmart margins? Meaning that, given the opportunity of time and flexibility, you would be able to fully

mitigate all that you see in front of you, and such that you would be able to have margin rates that are consistent

with what you would expect to do over the longer term? Thank you very much.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

Thanks for the question, Michael. Let me start with the second part of your question first. We don't see anything

and this is – we indicated this in our prepared remarks. We don't see anything that changes the way that we think

about our business long-term related to the current environment that we're in. And so we think that we can

navigate this. I think that's the thing that everyone is focused on, certainly the Fed, is to make sure that these are

one-time price increase and not something that persists and bleeds into wage growth and other things that have a

more longer-term effect.

In terms of the first part of your question, what I was referring to is, where the level of tariffs that were announced

at the beginning of April. Keep in mind, a week ago, we were at 145% tariffs in China. And certainly, you know as

well as anyone the preparation that goes into this day for us. And so when we started the preparation around

earnings, that's the construct that we were working under. And 145% tariff environment, and tariffs at a level that

are approaching 50% for other countries, is not a good outcome for retailers, it's not a good outcome for the

economy.

We're very pleased and appreciative of the progress that's been made by the administration to bring tariffs down

to this level. And the guidance that we gave today, the affirmation of our full-year guidance, is with tariffs at this

level. But let me emphasize, we still think that's too high. There are certain items, certain categories of

merchandise that we're dependent upon to import from other countries, and prices of those things are likely going

to go up, and that's not good for consumers.

.....................................................................................................................................................................................................................................................................

Operator: The next question is from the line of Edward Kelly with Wells Fargo. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Hi. Good morning, everyone. I wanted to follow-up on another tariff question and inventory planning. And as you

stated, it's a difficult backdrop for planning inventory. Tariffs, obviously, a moving target, I think uncertainty around

elasticities. So, against that backdrop, how are you thinking about the planning of the inventory? Do you stay lean

hoping the tariffs come down? Do you get aggressive because we're on a 90-day pause? And bigger picture

15

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

question that I have related to this is, can you avoid the risk of another 2022 scenario, given the dynamic

backdrop? Do you think that that's a risk for retail? Thank you.

.....................................................................................................................................................................................................................................................................

Yeah. Thanks for the question, Edward. This is Doug, and you guys can chime in if you want to. I think the way to

start is to remind you, as I said in my prepared remarks that we have a lot of replenishable items at Walmart. It's

such a strength to be operating off the side counters rather than some, sort of, high-low marketing-driven model,

where we're focused on features and the actionality and end caps, for example.

So, on replenishable goods, we have the opportunity to partner with our suppliers to see what happens with sales

as cost and then eventually retails adjust and then manage that through the weeks and months ahead. So that's a

great position to be in, and our merchants and our replenishment team are really good at that, and they're

managing that on a daily basis.

As tariff numbers have changed, they've done a great job of pivoting, recalculating quantities and thinking through

it again. Where it can get more challenging is we make decisions related to things like Halloween and Christmas

farther out. And how do you make a quantity call? And what tariff number do you use?

And the best answer we can give you is we've got a sales plan. We're operating against that sales plan. Some of

the quantities will be adjusted based on what we think the tariffs are going to be. We've made some tariff

assumptions. And then we'll partner with our suppliers to flow that, and if we need to chase goods, chase some

goods. And the bottom line is, yes, we want to avoid what happened back in 2022 and by paying close attention

to our unit decisions, that's how we'll do it.

.....................................................................................................................................................................................................................................................................

Operator: Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with

your question.

.....................................................................................................................................................................................................................................................................

Hi. Good morning. Thanks for taking our question. We wondered if you could talk about how the tariff situation is

impacting your sellers on marketplace both from an inventory standpoint and how you think about the contribution

to advertising as a result of this more difficult environment?

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Hi, Kate, it's John. In terms of overall inventory management, Walmart, along with our capability to serve sellers,

we've built a number of tools in the last three years that are particularly helpful. And for sellers, in particular,

having services like Walmart fulfillment service with heightened visibility of their inventory, where it is, our ability to

move around the country is particularly helpful.

As we sit here today, the ports are flowing, inventory is moving. So, we don't have any concerns at this point

about port backups in the United States, so our inventory is flowing through. I did mention earlier that our GMV

growth rates in marketplace, in particular, have been consistent over the last few quarters. You saw that in the

release.

16

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

We are also seeing that again as you exit the quarter. So we had a strong April in eCommerce. And this is a big

contributor to the overall health of the eCommerce business with the 21% growth rate that has been in place for

some time, which we are pleased to see.

And then finally, adding together our stores, our first-party eCommerce business, our new automated fulfillment

centers, distribution capabilities, our third-party business and fulfillment services that has enabled us to have this

ad business and data business, which has helped us mix out to achieve our first quarter of profitability in the

.....................................................................................................................................................................................................................................................................

Operator: The next question is from the line of Scot Ciccarelli with Truist Securities. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Good morning, everyone. I know you talked about 50% growth in advertising and 15% in membership. So can

you help reconcile those figures against what looks like just under 4% growth in the membership and other line in

the P&L, just so we can better understand the components there?

And then secondly, now that eComm has turned positive, can you provide any color on the magnitude of losses

you had incurred over the last, call it, year or two, just so we can better understand the size of the profit

improvement? Thanks.

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

Sure. I'll take the question. First on advertising, really pleased with the growth that we've seen there. It was

inflated this period because we got VIZIO in there versus comparing, I guess, a period that we don't. But our

overall advertising on an apples-to-apples basis was 27%. So, we feel really good about that.

On membership, we felt really good about the progress there. As I noted, we had International that grew north of

20%, both Sam's and US grew double-digits. The line that we have in our P&L, it includes other. It says

membership and other and that includes things like sustainability income. So think about recycling revenue, things

like that.

And that's probably a larger figure than what some people expect. And so that's what's – that's the reconciliation

to, I think, the 4% number that you quoted there. But overall membership is – actually, it's really one of the shining

points of the quarter. We're doing really well there.

On eComm losses, I don't think I want to get into the magnitude of some of the losses that we've had historically.

We've consistently, though, for years seen improvements there. You'd have to go back several years to see the

depth of sort of where losses topped out.

But John and his team, and it's really all segments, so if you look at what Flipkart is doing in India, look at what

Sam's has been doing, we've continued to see contribution profit be positive. And with the digital platform, as you

grow that at a positive contribution profit, you ultimately get to overall profitability, which is where we are today.

17

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

So this is kind of a milestone moment for us as a company. Hopefully, we don't talk about it every single quarter,

but I think it's notable this quarter that we've reached this milestone, and we've achieved this level of profit, and

we're looking forward to continuing to have that grow into the future.

.....................................................................................................................................................................................................................................................................

Operator: The next question is from the line of Robby Ohmes with Bank of America. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Hey, good morning. Thanks for taking my question. I was wondering if you guys could talk – give a little more

detail on general merchandise. You guys had deflation in general merchandise in the first quarter. Can you help

us think about deflation versus inflation in tariffs for the outlook here for the next three quarters? And also is there

any – are there pretty significant differences between mix of general merchandise or changing in mix of general

merchandise for in-store versus what you guys are doing in eCommerce?

.....................................................................................................................................................................................................................................................................

Chief Financial Officer & Executive Vice President, Walmart, Inc.

Robby, thanks for the question. I'll start, and some of the others may want to jump in. General merchandise has

been deflationary for over a year right now, and we've seen the impact of that. And think of it as deflationary in low

single-digits in the quarter. Importantly, though, we grew units in the quarter.

So we continue to see progress there. But the consumer is pressured. We've seen for a couple years now a shift

in the baskets away from general merchandise to those items that are more necessities versus discretionary. So

people are spending more on food.

So we'll continue to monitor that going forward. But the team, in particular, has made really good progress on the

assortment that we have. and advancing general merchandise. John, do you want to...

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Sure. Robby, good morning. We did see strong growth in categories like toys, kids apparel, and our baby

categories and others across the business. We do have stronger growth rates in eCommerce. In the total, you

can see that as well with 21% growth rates, which would reflect really a strong mix across categories. And as we

look at where we ended the quarter, we were softer in February.

Just a reminder, we had really tough weather. It was lapping leap year. We had snow across the country,

including the Southeast and on beaches across the Southeast. So, we had unusual weather in February.

I mentioned this earlier, March was – felt like more of a normalized month, closer to what we expected given the

flip in leap year and a much later Easter. And then as we got to Easter holiday, the units strengthened pretty

significantly. And we reported this morning that we were slightly negative in general merchandise with deflation,

but was really encouraged by the results that we had from the Easter holiday until the end of the quarter.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Sam's Club, Walmart, Inc.

Yeah. And in Sam's Club, we hit our fourth positive quarter of GM sales back-to-back in a deflated environment,

so units are the driver of that performance.

18

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Operator: Our next question comes from the line of Rupesh Parikh with Oppenheimer. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Good morning, and thanks for taking our question. So, I just want to go back to the strong momentum in the

health and wellness category. Just want to get a sense of how you guys feel about the sustainability of the

momentum? And then as you look at the pharmacy rollout, how is that trending versus expectation? And any

sense of whether it's driving new customer acquisition at this point?

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Hey, Rupesh. Thanks for the question. When we look at the pharmacy business and you saw in the reported

results this morning growth in the mid-20s, when you strip out the impact of GLP-1s, we saw prescription growth

over 10% growth in the quarter, which is very encouraging. That result is inclusive of market share gains, and it's

driven by a few things.

First, I would just like to complement our pharmacists, our pharmacy techs, the team in the field who do such a

great job, helping customers and patients with whatever they need help with. And then the second was the

initiative of pharmacy delivery which we launched in the first quarter, which has been helpful not only for

customers to receive their prescriptions the way they want to receive them, but it has resulted in growth of new

digital users in our eCommerce business.

So, we've had a digital business with text message for some time where you could renew. Now that you can

deliver, we see people signing up for an account on walmart.com and our app, and we're looking forward to being

able to serve them in more ways across categories.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Sam's Club, Walmart, Inc.

I think it's worth mentioning that Sam's once again for the ninth year in a row won the J.D. Power Pharmacy

Company of the Year. And the ex GLP growth is still double digits, so it's over 10%. So, we're feeling really good

about that business.

.....................................................................................................................................................................................................................................................................

Operator: Our next question is from the line of David Bellinger with Mizuho Securities. Please proceed with your

question

.....................................................................................................................................................................................................................................................................

Hey. Good morning. Thanks for the question. The first one, just on understanding outcomes for Q2 are so wide on

the guidance right now, and you can't give us a definitive range there on profitability. Can you just walk us through

your positioning on the full year guide? Why are you still confident to keep that range?

Do you expect these wide swings you talked about on margins and operating income, could those be contained

within the combined Q2 and Q3 timespan? And just, definitely, anything on International and the momentum

you're seeing there, especially on the operating income side? Thank you.

.....................................................................................................................................................................................................................................................................

19

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Chief Financial Officer & Executive Vice President, Walmart, Inc.

I'll start with the first part of your answer and then kick it over to Kath to talk about International. It's hard to

predict. We don't know the level of tariffs where the bilateral agreements are going to finalize that. We do know

that we're probably going to be in a period in the second quarter where we're going to see more markups than

normal.

It's why Doug and others have mentioned that it's so important to get inventory right in this environment, because

that reduces the likelihood of taking markdowns in the third quarter and potentially even into the fourth. And so, it

remains to be seen what the elasticity of demand is. It's something that's 30% higher or, in other cases, 10%

higher in certain items.

So, we'll have to see that. We've got a really, really good team of merchants and we have a lot of confidence in

their ability to navigate this environment. Fortunately or unfortunately, depending upon how you look at it, we've

got some experience here from a couple years ago. And so, we'll try to navigate this. And as Doug said, I like our

hand here. I think we can navigate this as well or better than anyone. But there's a lot of uncertainty, a lot of

volatility.

It's a dynamic and fluid environment. And we feel confident that we can land the year in the range that we've

talked about. But the swings from quarter-to-quarter are a little harder to predict, and we'll have to see how that

comes.

.....................................................................................................................................................................................................................................................................

[0LNYZ1-E Kath Mclay A

If I pick it up from there, because definitely, foreshadowed that we have swings by quarter in International when

we were together in Dallas. If I was to characterize the quarter, I would say, it was a good result, but I think we

can still do better. I don't think my team would be surprised to hear me say that because I think that's the constant

posture we typically have. When I look across the composition of the markets, we had a couple that had a weaker

backdrop which would be more Mexico and Canada.

I think we made strategic investments in high-growth markets like India. You heard Kalyan, CEO of Flipkart, talk

about that when we were together at ICM. Then I think we also had some choppy calendar results; leap year,

Easter, et cetera. So, when I look – step back and kind of look at the overall result, I think we're in high-growth

markets. We've got really strong businesses, and we're in a leading omnichannel position in those markets. And

so, I think, holistically, still feel really good about leading the enterprise from a growth perspective and growing

profit faster than sales across the full year.

.....................................................................................................................................................................................................................................................................

This is Doug. It's probably worth just repeating one more time the point about retail accounting as it relates to the

timing between Q2, Q3, Q4. In Q2, if we have a markup, we take it on all the inventory we have on hand, even if

we don't sell it in that quarter and even if we don't ultimately sell it at that price. So you could get a situation where

Q2 earnings look unusually high, and the range of outcomes is wider which is why we're not providing guidance

for the quarter.

20

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Then think about Q3 and Q4. Can you sell it at the price that you marked it up to? Yes or no? What do the

resulting margins look like? How do you manage markdowns? How do you manage inventory effectively through

the Q3 and Q4 period? And there may be more markups in Q3 and Q4.

We don't know right now because this environment is so fluid. I hope that helps everybody. Just I want to make

sure that you all understand this is an accounting issue, a timing issue, but it ultimately boils down to how well do

we forecast sales, manage inventory, and make quantity decisions.

.....................................................................................................................................................................................................................................................................

Operator: Our next question is from the line of Greg Melich with Evercore ISI. Please proceed with your

question.

.....................................................................................................................................................................................................................................................................

Hi. Thanks for all the detail on the tariffs. I guess, Doug, I just want to follow up on that last point. Given where we

are today with the tariff rate, the 30% incremental China, and then the 10% seems to be the baseline, what's the

time lag that you would expect to see that show up on the shelf? Is it three months, six months, is when is the

peak effect would be? And there's another question on that, what's the sort of magnitude? Are we talking 50 or

100 bps if it had to pass through at current rates?

.....................................................................................................................................................................................................................................................................

Yeah. Greg, it happens gradually. And as we mentioned earlier, we started to see increases happen in April and

through May. We've been really focused on back-to-school receipts. When you have an imported item, you pay

the tariff at the time it comes through customs.

And so the cost is higher, even if the tariff rate comes down later, the cost has been elevated. So I wouldn't think

of this as a moment in time necessarily, except when you think about seasonal things like back-to-school.

So I think it will feel more gradual. And as we've been saying to everyone, the first thing that goes through my

mind is food inflation. We've been through a number of years here where prices have gone up on food, and our

customers have felt that, and they don't want any more food inflation.

And so what we hope happens is that there are changes from a policy point of view that help us get prices back,

ex tariffs on bananas and things that we don't grow here. So food inflation is very much on our mind.

And as it relates to GM, it will vary by category, which country is it? If it's from China, obviously, it will have a

higher amount. And this reset of costs will play out through the year. We'll have seasonal items. It will be higher

than they would have been otherwise. So I think what we're looking at is upward pressure that began in April and

plays through the entire year on things that are imported.

And again, we've been working for years to try and make sure that we've got surety of supply, we're sourcing from

the right places, create a more flexible supply chain, and we've made progress on that. And I think relative to

others, we're well positioned.

.....................................................................................................................................................................................................................................................................

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

your question.

.....................................................................................................................................................................................................................................................................

21

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

Hi. Good morning and thank you for taking my question. I wanted to ask about the evolution of marketplace and

specifically, what your strategic priorities are for the current fiscal year as it relates to seller additions, where you

are looking to expand the depth or breadth of the assortment?

And just given the cost of tariffs, how are you thinking about general merchandise elasticity for the in-store

business versus marketplace in the back half of the year? Thank you.

.....................................................................................................................................................................................................................................................................

President & Chief Executive Officer-Walmart US, Walmart, Inc.

Hey Krisztina, it's John. I think the first thing that is important to note is we want to be flexible for our customers

and deliver what they want, when they want it, however they want it to be delivered. And so, what you'll see in the

coming months, quarters and years is a continued focus on expanding our assortment to be able to deliver our

customers what they're looking for without the need of looking at another app or going to another location.

Our supply chain capabilities that include our next-generation fulfillment centers, our ability to use our stores for

delivery in a very dense, local, low-cost way are all parts of the solution to be able to serve customers flexibly. So

assortment would be first.

Second, we want to ensure that we have the right suite of services available to our sellers. Our sellers need to

know where their inventory is, the rate of sale. We have an application they can look at on their phone that tells

them a lot of the critical information that they're going to need.

And then third, our sellers who are launching brands, developing brands or selling someone else's product,

they're looking for ways to connect to relevant customer cohorts that are interested in their products. So being

able to use our data to help them access cohorts who are interested in their categories and then advertise

through Walmart Connect is a big part of the solution that all of our sellers are going to need.

In terms of elasticity, we watch elasticity, and we are constantly reforecasting quantities placement. This is

something that we do each and every day, every week, every month, every quarter. So there'll be a period here

where we'll be watching this, and we are watching this very closely with much better tools and visibility to know

what we own, where it is and where it's moving.

And then we'll continue to ensure that as – just as we talked about earlier, the supply chains continue to flow.

We're in stock for our customers in the store at the counter. We have great quality of produce and fresh. And then

finally, our fulfillment center inventory is placed well so that if a customer places an order, we'll be able to deliver it

in a very fast manner and meet the promise that we told them.

.....................................................................................................................................................................................................................................................................

[0LNYZ1-E Kath Mclay A

And if I can just chime in from an International perspective, like we're very proud of the progress we're making in

Flipkart. But if I focus on our other marketplace businesses in Canada, Chile and Mexico, our total marketplace

GMV grew over 30% year-on-year. And a lot of that is because we have – in this quarter, we signed up over

4,000 new sellers in Mexico and Canada.

22

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC

(WMT) Corrected Transcript

Q1 2026 Earnings Call 15-May-2025

We also launched Walmart Connect for our marketplace sellers in Canada, and we've seen really high

engagement with that. And our SKU count grew over 80% in Canada and Mexico over this last quarter. So, a lot

of upside and a lot of growth and momentum in our marketplace business across International.

.....................................................................................................................................................................................................................................................................

Thanks again for dialing in and asking great questions. We have momentum, and that momentum continues. We

feel good about our ability to win with customers, to serve them how they want to be served. We're encouraged by

the fact that eCommerce growth across all three segments continues to be strong, all three segments growing

more than 20%.

Secondarily, we're strengthening our business model, playing that through regardless of what's happening with

tariffs. The 50% growth in advertising, the 15% growth in membership I think are really encouraging.

And then thirdly, as it relates to the short-term environment, we think we are positioned to manage this as well or

better than anybody. We will do our best to serve our customers well, to help keep prices low. That's really

important in an environment like this, and it's our purpose.

That's what we're here to do. But we believe we can do that while continuing to execute the strategy, change the

business model and grow profit faster than sales. So that's our consistent message, and we're confident in our

plan.

.....................................................................................................................................................................................................................................................................

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your

participation.

The information herein is based on sources we believe to be reliable but is not guaranteed by us and does not purport to be a complete or error-free statement or summary of the available data.

As such, we do not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of the information. You must evaluate, and bear all risks associated with, the use of any

information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used as the primary basis

of investment decisions. It should not be construed as advice designed to meet the particular investment needs of any investor. This report is published solely for information purposes, and is

not to be construed as financial or other advice or as an offer to sell or the solicitation of an offer to buy any security in any state where such an offer or solicitation would be illegal. Any

information expressed herein on this date is subject to change without notice. Any opinions or assertions contained in this information do not represent the opinions or beliefs of FactSet

CallStreet, LLC. FactSet CallStreet, LLC, or one or more of its employees, including the writer of this report, may have a position in any of the securities discussed herein.

THE INFORMATION PROVIDED TO YOU HEREUNDER IS PROVIDED "AS IS," AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, FactSet CallStreet, LLC AND ITS LICENSORS,

BUSINESS ASSOCIATES AND SUPPLIERS DISCLAIM ALL WARRANTIES WITH RESPECT TO THE SAME, EXPRESS, IMPLIED AND STATUTORY, INCLUDING WITHOUT LIMITATION ANY IMPLIED

WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE

LAW, NEITHER FACTSET CALLSTREET, LLC NOR ITS OFFICERS, MEMBERS, DIRECTORS, PARTNERS, AFFILIATES, BUSINESS ASSOCIATES, LICENSORS OR SUPPLIERS WILL BE LIABLE FOR ANY

INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS OR REVENUES, GOODWILL, WORK STOPPAGE,

SECURITY BREACHES, VIRUSES, COMPUTER FAILURE OR MALFUNCTION, USE, DATA OR OTHER INTANGIBLE LOSSES OR COMMERCIAL DAMAGES, EVEN IF ANY OF SUCH PARTIES IS ADVISED

OF THE POSSIBILITY OF SUCH LOSSES, ARISING UNDER OR IN CONNECTION WITH THE INFORMATION PROVIDED HEREIN OR ANY OTHER SUBJECT MATTER HEREOF.

The contents and appearance of this report are Copyrighted FactSet CallStreet, LLC 2025 CallStreet and FactSet CallStreet, LLC are trademarks and service marks of FactSet CallStreet, LLC. All

other trademarks mentioned are trademarks of their respective companies. All rights reserved.

23

1-877-FACTSET www.callstreet.com Copyright © 2001-2025 FactSet CallStreet, LLC