Walmart Goldman Sachs Global Consumer and Retail Conference

We keep a close eye on our price gaps. And right now, we feel really good about our price gaps. They are strong, and it is driven by the investments that we made. Now it's really our job to work with our suppliers and take those rollbacks that we're working and turn them into the Every Day Low Price for our customers so that they can experience them moving into the back half of the year.

If you look at inflation for the front half of the year, we were at roughly 1.4%. Food was closer to 1%, and then general merchandise was closer to 2%. As we moved into Q3 and you saw the impact of the price investments, we saw that rate come down below 1%. Again, as we look forward, we anticipate the back half to look very similar to what we saw in the front half of the year with regards to inflation.

I think I want to start by just saying we have a fantastic health and wellness business, and it is very strong. Makes up about 10% of the U.S. business, and the majority of that is our pharmaceuticals business. MFP or Maximum Fair Price was applied to about 10 high-volume drugs. About 8 of those drugs either went generic or offered their prices beyond Medicaid to essentially all consumers, and that is a top-line headwind. But again, the core is strong. We saw script growth grow year-over-year in Q2. We are seeing our profitability in this sector, double-digit improvements year-over-year. And this customer is incredibly important to our business. I just want to unpack that just a little bit.

If you think about the average Walmart customer and the Walmart customer that also engages in health and wellness, the health and wellness customer spends about 3 times more than the average Walmart customer. If they use Pharmacy Delivery, so we have lit up the same delivery capabilities that we have for general merchandise and for food for pharmaceuticals. We can deliver to 96% of the U.S. population in 3 hours or less, 60% of the U.S. population in 30 minutes or less. If you look at the Pharmacy Delivery customer, they spend almost 6 times more than the average customer. We have seen this year same-day deliveries for pharmacies jump over 2x year-over-year. And for folks that are using pharmaceutical deliveries, we are seeing a 10 times repeat rate, 10 times improvement in repeat rate year-over-year.

This is an important part of our business. When folks lean into it, they engage with more of the Walmart ecosystem and spend more with Walmart. We are excited about health and wellness. We have a headwind, as you mentioned. That headwind will continue into next year as they have announced 15 additional drugs that will go on MFP. But the core business here is very strong.

Absolutely. We're proud of our e-commerce growth. We saw 24% growth this past quarter. That was our tenth consecutive quarter of 20% plus growth. If you think about the fundamentals that drive e-commerce, it's actually not all that different from the store side too. There's three things we focus on. That's assortment, price, and experience. From an assortment standpoint, customers want a broad selection of goods that they need, want, and love. An example of how we're bringing that to life in our e-commerce business is Walmart Marketplace. They also want goods and services. We have our pharmaceuticals business. We have our vision business. We have our Auto Care Center business. All of these have digital capabilities as well. We have our new service that we launched or announced earlier this year with quick service restaurant delivery, and we launched some additional partnerships just last week and this week.

We're enhancing assortment. When it comes to price, it's just part of our DNA. We focus on operating at Everyday Low Cost so that we can drive Every Day Low Prices. We're leaning into new capabilities like automation, Physical AI, to make our network more efficient so that we can reinvest in the price and reinvest into experience, which is the third point that I was making. We are improving the digital experience on our website, on the app. One way we're doing that is with our new agentic agent, Sparky, which I'm sure we'll talk about Sparky here in a little bit. We're also taking that broad assortment and we're making it available to customers faster. We see about 70% of the deliveries that we bring to customers' homes delivered same day or faster.

In our expedited delivery, express delivery, we saw a doubling in 30-minute or less delivery year-over-year. All of these things are driving that core e-commerce business. Other things I would note with e-com is as the business grows, we become more efficient. We densify our first mile, our mid-mile, our last mile. We densify the volume moving through our stores, moving through our Fulfillment Centers. That lowers our cost to operate. Then we have these three magical businesses that are helping reshape the P&L within e-commerce. That's our membership, which is incredibly important. That's our Walmart Marketplace, which I've already mentioned, and that is our advertising business. All three of those saw double-digit comps this past quarter and have a lot of momentum.

Absolutely. There's really two things that I would highlight here, Kate. One is Sparky, and we'll talk about Sparky a little bit, but the second is AEO, Agentic Engine Optimization. This room, I'm sure you all are very familiar with SEO, Search Engine Optimization. We've been doing that for decades, but we're entering into a new world. I want to talk about that as well. Let's start with Sparky. Sparky is our agentic agent. I don't have my phone on me, but if I did, I'd pull it up. If you go to the app, it's at the very bottom, and Sparky is smiling at you. I would recommend take some time and engage with Sparky. Sparky is becoming more and more capable as we move forward in time. Sparky can now help you check out. Sparky can help you take care of customer service.

Sparky has tens of thousands of recipes, so if you need to build a meal, Sparky can help you build a meal. We launched a new capability with visual shopping with Sparky, so you can now take a photo and Sparky will help you shop depending on what your mission is with that photo. When customers utilize visual shopping, we see the conversion rate jump by 57% versus text-based shopping. One of my coworkers had this great example that he did recently and shared with me. He went out to his backyard, and I guess he doesn't do a great job taking care of his grass.