4 key takeaways from Walmart’s quarterly earnings call

Walmart (WMT) executives addressed the state of American consumers as well as progress on issues such as price reductions and the integration of artificial intelligence (AI) into the business during their conference call on Thursday.

The retail giant’s second-quarter revenue beat expectations ahead of Thursday’s conference call, while Walmart also raised its full-year revenue and profit forecasts. Walmart shares rose 6.4% to $73.04 at 11:35 a.m. ET, after hitting a record $74.43 following the conference call.

Comparable store sales prove to be constant

“So far, we have not seen any weakening in overall consumer sentiment,” said Walmart CEO Doug McMillon, and Chief Financial Officer John David Rainey added: “Sales pace remained broadly consistent month-over-month during the quarter.”

As it did last quarter, Walmart said growing market share across all income brackets was a key factor in the sales increase. McMillon said, “Value is important to everyone, whether you make over or under $100,000.”

While lower-income consumers focus on getting the most out of their budget, McMillon says sales are increasing among higher-income customers who can spend more on non-essential purchases while also valuing convenience.

Walmart prioritizes lower prices

Both Walmart’s U.S. stores and members-only Sam’s Club reported “slightly deflationary” sales during the quarter as the retailer prioritizes adding value to customers over improving margins on certain products.

While some Walmart suppliers are lowering their prices, others continue to complain about cost pressures that Walmart is “aggressively addressing,” McMillon said, “because we believe prices need to come down.”

AI and automation increase efficiency

The company’s management also provided information on Walmart’s current efforts in the area of ​​artificial intelligence and automation, which analysts say could lead to billions of dollars in savings and increased operational efficiency over the next few years.

McMillon said customers will soon have access to an AI shopping assistant that can help them make smarter purchases by answering questions such as the quality of lighting in a room where they want to put a new TV. John Furner, CEO of Walmart US, added that using generative AI to complete tasks such as writing product descriptions is “100 times more productive” than humans doing the same task.

E-commerce segment tends towards profitability

Walmart’s e-commerce retail sales are also growing, and the segment’s losses are narrowing as the retailer works to cut costs. Rainey said Walmart reduced delivery costs per order by 40% in the second quarter, and also said e-commerce retail sales were the biggest contributor to Walmart’s year-over-year operating profit improvement.

McMillon also said that generative AI helps make e-commerce more profitable by providing consumers with more relevant product suggestions and encouraging impulse purchases.