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Walmart Inc. (NYSE:WMT) BofA Securities 2022 Consumer and Retail Technology Conference March 9, 2022 3:30 PM ET

Company Participants

Brett Biggs - EVP and CFO

Conference Call Participants

Kendall Toscano - BofA Securities

Robert Ohmes - BofA Securities

Robert Ohmes

Okay, everybody. We have saved the biggest and best for last at the BofA Consumer Conference. I'm Robby Ohmes from BofA Global Research. So look, we're really pleased to have Brett Biggs, the EVP and CFO of Walmart stores, with us here today.

If you don't know Brett, I'm pretty sure most of you do. Brett has been with Walmart since 2000, working in several different roles. He was EVP and CFO of Walmart International. He was EVP and CFO of Walmart U.S. division. He's also worked as both the CFO and later - and SVP of Operations at Sam's Club. He was also SVP of International Strategy and M&A. So I think I - this could be the last time that you appear here because I think the - as Brett, I think, plans to leave the company at the end of this fiscal year after 22 years. So he is going to be very missed, I'm sure, from Walmart, but definitely by people like me at BofA.

So Kendall and I feel honored that Brett made it here today. And I want to thank Kary Brunner for showing up as well.

Question-and-Answer Session

Q - Robert Ohmes

But I'm going to start off with my first question for Brett, which is can you just walk us through the drivers to the over 3% comps? And maybe put it in the context of inflation and other things that might be going on for -

Brett Biggs

Yes, you bet. Yes, thanks for having me. It's a bit surreal to be back in person. I think it's been - truly it's been a couple of years really since we've done this live. So it's great to be back around people and answering these questions live, more than what we're doing over the last couple of years. Yes, I mean the business, as you would have seen in Q4, is performing really well across the company, whether that's Sam's U.S., international, I feel great about the strength of the underlying business.

The 3% comp that we talked about is on top of a pretty big number. We've added a significant sales volume to the U.S. over the last couple of years. Walmart U.S. is like a 15% 2-year stack over two years. But there's really a number of things that I think get us comfortable with that, and some of that is just the evolving nature of the business as we're seeing people obviously come back in stores.

Store traffic's been very strong. Our e-commerce business has roughly doubled over the last couple of years with these newer businesses that we're also spending time and resources and seeing good results from those. It's all of those things combined that make us feel good about the business.

We've continued to grow market share in food. So that's always been a driver for the company, particularly with the advent of the supercenter many, many years ago. But our GM business is strong, and we still get good attachment with the GM basket to food. So when you think about all of those things together, and you've heard me say a number of times, Robby, about our ability to pull different levers, it's all the levers that we had to pull that I think makes us feel good about that guidance and good about the business.

Robert Ohmes

And within that, I think your store traffic has remained positive. Is that right?

Brett Biggs

Yes.

Robert Ohmes

How much of that is people returning to stores versus your pickup in delivery continuing to grow so fast? And maybe a little help on what you're doing right there.

Brett Biggs

Yes, it's some of both. I mean certainly went through a period of time during COVID, the early parts of COVID where people either couldn't come in the stores or were choosing to stay home. And we've seen a reversal. We saw a reversal of that last year, probably a little quicker than we would have anticipated that the store traffic would come back, particularly in parts of the country came back more quickly than we would have thought.

But the businesses that we continue to grow, whether, you said pick up, delivery, the work we're doing in in-home, it's all of these different ways that customers can shop with us, GoLocal, that I think makes a difference and continues to get us top of mind with shoppers. That's what we want when we talk about omni strategy and our flywheel is when customers think about shopping, that Walmart is the first place that comes to mind for them, because they know whether I want to go pay at my car, I want to go in the store, I want to shop at home, I can do all that with one company, and we think we're giving the customer that today.

Robert Ohmes

And speaking of customers, I wanted to ask you the - I mean, you guys probably know the broader U.S. customer better than anybody. So really from three aspects, the first is just what is your customer? How are they responding to just general inflation out there? And maybe we could include maybe general inflation and then gas inflation may be too separate, but connected. How does that historically affected your customer? And how do you think it will this time?

Brett Biggs

We know from our own surveys and things that you read, that certainly inflation is on people's minds. They're noticing it. We said this in our Q4 earnings release. So the customer and consumer, we still feel like is in pretty good shape, and that was part of our guidance that we gave as we came into this year.

The increase in fuel prices is going to get people's attention, certainly, and I'm sure we'll talk about that. But Walmart, if you look at our customer base, we really span the entire demographics of the United States. We do have a component of our customer that would lower middle-income customers, but we really span the entire breadth.

We think that is beneficial to us as a company that we can do incredibly well, like we did in the last couple of years. Now we had tailwinds, which we understand with stimulus and other things. But when the customer really needs us, we're there with lower prices. And where price caps in great shape, we're able to fulfill the needs that they have, and I think we can do that better than anyone else.

What we've seen historically with fuel prices when they increase is you tend to see a little bit of consolidation with shopping trips. You'll tend to see fewer trips. You'll tend to see bigger baskets, which again, bigger baskets is really our sweet spot. And so as customers need us, like they always do, but maybe need us a little more now, we feel like we're in great shape to be there for them.

Robert Ohmes

And the other one is just on stimulus. Can you maybe remind us what you see last year in February and March or March, April, when this big stuff hit? And then what's the expectation when you anniversary it?

Brett Biggs

Yes. If you remember, we had - I think we had our Analyst Meeting mid-February and then right after that was when the big stimulus was announced. So really March and April, we saw a large increase in sales and operating income, particularly in the general merchandise side. And food, food continues to be steady as it always is, but general merchandise was big. And that's why we've talked about first quarter will be down fairly significantly because of last year. But when you look at the two years together, we're in a really strong still 2-year stack.

Every quarter right now feels a little bit different, somewhat because of what we're lapping from last year as you went through the stimulus and then you had COVID rail a little bit in the second quarter and then obviously, again, in the fourth quarter last year. And that influenced buying habits as well as people, our own associates and their ability to get to work and all of those things. And so as we go through the year, we'll be really transparent about how, what we're seeing this quarter compared to what we saw last year.

Robert Ohmes

And there's been a couple of other large retailers here on the grocery and warehouse club industry. We've asked them about trade-down versus trade-up. And there hasn't necessarily been trade-down seen yet. Is that - would you say that's true for Walmart also? Is the customer trading down? Or are they trading up? Or...

Brett Biggs

Yes, we haven't still haven't seen what I'd call a meaningful change in how customers are shopping. And there's a lot of things I'm sure that influence that. Unemployment's low. Wage rates are high. Savings rates are still in pretty good shape.

So a lot of those things will help. Again, I think the great thing for the way that we do business is customers want to trade it - call it, trade up or down. We have all the products that they're going to need. We have the different price points they're going to need. We have private label. We have other things that can satisfy where the customer is at that time. And I think we're unique in that way.

Robert Ohmes

All right. I'm going to shift over to another thing that we were all hoping was going to be less talked about as we move through this year, but now it's back up again as supply chain. There were some great things you guys did in 2021, I think. And you guys kind of were saying that you were going to be pretty well stocked for holiday relative, and you were.

Brett Biggs

We were.

Robert Ohmes

Can you do that again? And what are you - as you, guys, are largest importer of merchandise into the United States basically.

Brett Biggs

Well, fortunately, for us, about two-third of what we sell, what we saw our stores is either made or assembled in the U.S., and that helps a lot. So it's a good starting point for what it takes to stay in stock. We do import goods certainly from different countries. Our merchants are so experienced, and our supply chain teams are so experienced. And you go back even three years ago, we were talking about tariffs and then you had supply chain issues.

And so they've - every one of these types of things is different, but a lot of experience has helped us weather this, probably some better than others. Still having some longer lead times on things. Still not quite in stock at where we want to be on every category. You saw our U.S. inventory up 28% in the fourth quarter. I feel good about it, but that indicates some longer lead times, some ordering ahead that you might not see in normal time.

So in general, we feel like there are parts of the disruption that are getting a little better, and we've seen that in the last couple of weeks - the last couple of months. We thought that might happen as we got through the holidays, that's what we're anticipating. Obviously, there's still a number of things going on in the world that could impact, whether that's COVID or other things that are going on, and we're going to be mindful of that and continue to have our teams do what they do really well and keep us in stock.

Robert Ohmes

Are there any - would there be anything you've learned over the last year or two that would encourage Walmart to look at different ways to do supply chain? Would you own more of the transportation side of it? Would you - any kind of things like that or...

Brett Biggs

Yes, probably nothing that dramatic. But the thing that's - it doesn't surprise me, but it always amazes me is how quickly and how flexibly the company can move. Look at everything we experienced in the last two years, starting with March and April of 2020 when the demand on products was unbelievable, and we went from a few 100 stores that could ship directly to home to thousands of stores that could ship directly to home in a month; the ability to think about having your own vessels to bring products in; the ability to get products off of a shipping lot in a different way, all of those things were incredibly creative.

So what gives me hope about this current year is that, that creativity won't go away, and we'll find creative ways to work our way through this. And we've seen things in the last two years of probably no ever thought we would ever see or ever have to experience. And it just gives me confidence in the team that we have that we'll work our way through things.

Robert Ohmes

And what are you guys seeing these days on the labor front? Are you getting everybody you want to get? And do you think the wage increases is a kind of every year thing forward here for the industry? Or how should we think about that?

Brett Biggs

Yes, we were able to hire really well for the holidays. We hired a couple of hundred thousand people before the holidays, which is pretty amazing on any scale. And if you go back, Robby, a couple of years ago, we were pretty proactive in raising wages in our stores and our supply chain as well. And I think we got ahead of some of what was coming.

And if you look at our average wage rates in stores now, we're at over 16.40 per hourly wages. Sam's a little higher than that. Our distribution centers will be - our supply chain will be over $20 an hour. So I think we're in pretty good shape from that standpoint. The things that give me a little bit of encouraged, even though unemployment is low, a number I watch quite a bit is the labor participation rate. That seems to be ticking up a little bit. So maybe more people coming back into the labor force that left during COVID. So that would be helpful to get the additional people back into the labor force. But our ability to hire has been good.

Robert Ohmes

And have you - when you raise wages and when you see larger employers across the U.S. raging wages, I mean how quickly do you see that show up in your - in that - this is the top line of Walmart U.S.

Brett Biggs

As far as raise wages?

Robert Ohmes

Yes. When you see wages going up, does it translate to better sales for you guys, typically?

Brett Biggs

I think you see it probably more pronounced when you're taking more proactive action, like we did a couple of years ago when we were proactive, not only around that, but we were looking at benefits around Live Better U. So the educational service that we had, when you're looking at 401(k) benefits, when you're looking at things like that and looking at bonus structures. When it's, I think, a more proactive environment, you tend to see more benefit from that. And that's why I'm glad we did what we did over the last couple of years. Because I think it is a signal to your team that you're wanting to invest in them.

And not only that, invest in their careers still, I think I could get the number wrong, but I think about 75%. Some of our store managers started out as hourly associates. So not only are they looking at pay, they're able to look and see that guy or gal, that's my store manager, they started out just like I did, and I can do that and make - have a great curve and make a substantial amount of money. So I think we have that going for us as well.

Robert Ohmes

Okay. Now I'm just going to ask a question that has to be asked. Can you just take us through that gross margin? Puts and takes, what's it going to be in the next couple of years? How high can it go?

Brett Biggs

I've got [indiscernible] sense on gross margin since you - yes, I'll go back to Q3, and we had U.S. gross margins that went down a little bit. And I know it garnered probably more attention than I would have anticipated for any one quarter. And Robby, I think you've heard me say now for almost seven years, it's really hard to look at one quarter of gross margin, so please don't do that, then in Q3, I think we did that. And so I felt good at that time that we're going to see Q4 be a little bit different. And it was. U.S. margins were up quite a bit in Q4. And it's - there are several things.

One, there's just so many things that go into gross margin. And particularly, when you get into environments, there's a little bit inflationary, you're going to have some lag at times in the way prices move and the way you're able to change prices, which we've had to take some prices up on some things.

But I feel good about our margin overall in that our mix continues to get better as we continue to have more general merchandise and particularly, in our e-commerce business, that helps with margins. When you look at shipping costs and the ability to ship more effectively with the capital that we're putting in supply chain, I feel good about that. That helps the contribution margin. When you look at the new businesses or newer businesses that we're in or getting into, which is advertising, that helps margin, also helps with suppliers and with customer retention.

I feel great about our Marketplace business. We added 20,000 sellers last year. I think we'll add another 40 this year. And that's something that we could get that 1P/3P mix a little bit different inside the e-commerce business, that helps. So as I look longer term, and we've said that we think gross margins will be a little bit higher next year than they were this year. But I feel good longer term about where the gross margin of the business could be.

Now is a quarter-to-quarter going to be exactly straight lined? Probably not because there's a lot of things that go into gross margin. But over - as you look at it on a yearly basis or semiannual basis, I feel good about that.

Robert Ohmes

And from a shorter-term perspective, how should we think about things like benefits you probably saw from COVID vaccines in the pharmacy? Any other things that we should be thinking about as the headwinds in the kind of short term this year?

Brett Biggs

Yes. Like I said, there are so many things from last year that every quarter, we have to come out and help you and remind everybody that we had this year, we didn't have it this year. It's not quite business as usual as we would have seen a few years ago. So there are some things like that. There will be a little bit of headwinds last year, but we've got some - versus last year, but we've got some businesses this year that are bigger than they would have been last year that are going to help.

Marketplace has gotten bigger. Our mix continues to improve. I think all of those things will play out positively as the year goes along.

Robert Ohmes

And then I think you warned us to at least expect a little bit of deleverage this year.

Brett Biggs

That's right.

Robert Ohmes

Can you kind of walk us through as much as you're allowed to on the detail behind that?

Brett Biggs

Yes. And if you - you'll go - you'll remember, you go back six years ago when we came out and said we're going to have to invest some in stores and in e-commerce. And we did that, but we said we feel good about the business going forward to drive our top line. I think we've done that. But it was at that time, I think we took another sharp look at our cost culture inside the company, which has always been a hallmark of Walmart.

And I still feel really good about the cost culture that I see inside the company. There are things that are certainly higher than they were last year. Wages, we've talked about. We're lapping some wage investments that we made last year, we won't fully lap until we get into kind of the middle part of this year. COVID costs were up again in the fourth quarter. But if we don't get another variant, I'd expect those would get back to a little more normal level like we saw maybe in Q2 and Q3.

Supply chain costs, we'll see. We'll see how that goes through the year. We had some elevated costs in Q4 that we certainly don't anticipate it being at that level throughout the rest of the year. We'll see how that goes. But if you strip out those big elements and just look at the general cost base of the company and looking at it longer term, I still feel good about it. I still feel good about our ability to leverage.

We had - you go back two years ago, we said we thought we could lever 20 basis points or so a year. Take out some of what we've seen in the last couple of years, I still would have felt good about that number. And we'll continue to invest in a way that's healthy. The best way, of course, to leverage expenses is to keep getting the top line higher. And I feel good about our ability to do that long term.

Robert Ohmes

And then maybe within that top line, how should we - does Walmart's approach to price increases change if it starts to look like inflation is going to be a multi-year, mid-single-digit-plus situation? Like what's the - I don't know how far back we have to go, but I'm sure there was a median in the mid-80s. I think it might have been an environment like that. What was Walmart's approach to secular...

Brett Biggs

You and I were really young.

Robert Ohmes

I know. I've been reading a lot of these.

Brett Biggs

I mean a long way, a long time, not that long.

Robert Ohmes

But what's the approach to secular inflation if we do go into that area?

Brett Biggs

It's tough with hypotheticals, but I can tell you how we talk about it internally. And there are certain cost increases you're going to get or where you're going to see where commodity prices are going up. The first thing we're going to do is work with our suppliers to keep their cost increases as low as possible, because that's what we need then to keep prices lower for customers. So that's the first thing we're going to do is we'll be working with suppliers.

We have taken some prices up. The good thing is we have such a large SKU count, a large basket that we can take it up, I think, strategically in ways that hopefully impact customers less than some of our competitors do. But our mission is to save people money. And that can take on a different meaning a bit when - if inflation is a little more persistent, where we still, from a competitive standpoint, will be where our customers need us to be.

We also have to be thoughtful to shareholders, obviously, when we do that. And I think we're at a point right now and where I think we're doing a good balancing act of taking care of customers as well as taking care of shareholders. I think you saw that in the fourth quarter with the way the P&L was managed. I think we'll consistently be able to do that. We are - Doug - you'll hear Doug say we're inflation fighters for our customers, and we view it that way. But we also know we have shareholders that we have to take care of.

Our price capture, in great shape, which I think gives us optionality on how we can continue to take care of that customer. It gives us more ways to do that maybe than some of our competitors. And our merchants are very, very focused on those price gaps. But if we can get price gaps where we think they need to be good for the customer, and we continue to take market share, which is really what you saw in Q4. You saw in Q3, too, it just looked a little different in Q3, I just - I feel good about our positioning that we can do - we can fulfill our mission, save people's money so they live better and fulfill our mission with shareholders.

Robert Ohmes

That makes sense. I think we're going to shift over to e-commerce, and maybe I'll start with just a broader question on it. And then I think Kendall has a bunch of follow-ups. But the - how should we think about the - it looks like penetration is dropping for the industry a little bit versus on a year-over-year basis. How are you guys thinking about 2022 e-commerce versus in-store?

Brett Biggs

Yes. 2021 was pretty amazing when you look at the growth rates in that year. And I think everybody knew you probably weren't going to have those growth rates over again. Again, people came back to stores a little more quickly than we would have thought - or 2020, sorry, people, I'm thinking fiscal year. Calendar year 2021, people came back into stores more quickly than we would have thought.

So our e-commerce number growth rate would have been a little bit lower than we would have anticipated. You would have seen that. But over two years, basically, still double - roughly double the business. So penetration was - it's going to be hard to replicate the year before.

The great thing for us, and I kind of answer every question this way, so I'm sorry, but the great thing for us is the way we have the business structured right now. With stores, with e-commerce, with delivery, really nobody has that. And so we're somewhat ambivalent to how customers want to shop.

Now there's - there are parts of that, that are more probable than others, but it's our job as management to let the customer shop the way we want to. And then we've got to make the P&L work. And I feel I have no concern that we can make that happen. So I think e-commerce can continue to grow. There's no doubt about it, but people are going to continue to shop in stores, and they've come back and drove into our stores, which is great for us. Okay. I'm going to turn this way now.

Kendall Toscano

So actually, on making the P&L for e-commerce work, can you just remind us, to what extent has Walmart been able to improve e-commerce profitability over the past few years versus how much do you expect that you can continue driving improvements over the next few years?

Brett Biggs

Yes. We've been really focused on our contribution margin rate, and that's continued to improve. And there are several things that drive that. Mix is really important. So if you sell more home and apparel than you do cans of corn, and that's really good for your product mix and it helps with margin.

Variable cost is something that we look at all the time, which is how much it cost to process, ship and order. That continues to come down for us. I think with the capital that we're going to spend over the next few years, that will continue to come down. I feel very confident about that. And then there's services - or services like Walmart fulfillment services, which part of the capital that we'll be putting in over the next few years, is going to be around that as well, increasing our ability to fulfill that - or additional capacity to fulfill that for our sellers. That's going to be a big leverage point for us in the future and then continue to grow third party.

So marketplace, we're putting a ton of effort into that. We're making progress, as I mentioned earlier, with the SKU count, with the number of sellers, all of those things that they're - if they're moving in the right direction will improve contribution margin, and that's what we need. And all four of those things are now moving in the right direction.

Kendall Toscano

That's helpful. And then shifting gears a little bit, I wanted to see if we could talk about some of the alternative profit stream opportunities for Walmart. You guys have mentioned things from digital advertising to financial services and health care. What are you most excited about for 2022 and maybe five or 10 years down the line?

Brett Biggs

Yes, they're all great, and it's - you talk about Marketplace, water fill services, advertising, fintech, health care, data monetization, there's, let's call them less than two handfuls of initiatives that we've spent a lot of time over the last few years that I think all have a great chance to scale. And they all fit really well inside of our business.

The great thing is when you have less than two handfuls, one, there's not too many of them that you can't focus, but also not all of them have to work exactly the same way for you to have a successful business. Some of these will work way better than we ever anticipated, and there'll be one or two that maybe don't work as well as we think. But they all have a great base and strategy behind them that made me feel good about it.

Advertising is the one that's probably taken off the quickest of all of those, and we've talked about we have over $2 billion business. Now I think that surprised people a little bit when we talked about that last quarter, but that's something that can continue to ramp. With all the eyeballs that we have on our site and our stores with advertisers, it's a very natural outflow of what we do.

I'm on the Board of our Fintech JV, and we work - I work a lot with Omeros Mel and Micky Malka, who are two of the best in the industry, and we've just announced a couple of acquisitions that we hope to close soon that I think could really change the way that we interact with our customers on financial services and get more involved in their lives. So I'm very excited about that.

We talked about Marketplace a bit in fulfillment services. That can - it can really be game-changing for the entire e-commerce business. We have a great e-commerce business today, and it's growing, but those kind of things can really be an accelerant to that business. And then health care is a business we've been in for a long time. We have a big health care business already, and we've trialed clinics. We've trialed diagnostic labs. And all of those things have the potential on their own to be pretty big businesses for the company, but they all tie in really well to how we interact with our customers.

I wouldn't anticipate us doing something that would surprise investors or analysts that you look at a business and go, I literally can't figure out how that ties to Walmart's business. Even if it were a great business financially, it's got to be something that ties in with our customers. And each one of those, I can lay out the strategy for you and think about what the P&L could be and be very excited about it.

Kendall Toscano

That's helpful.

Brett Biggs

But I can't choose at this point. I'm sorry.

Kendall Toscano

I was just going to ask as a follow-up on digital advertising. Since you guys have partnered with the Trade Desk, I think it was around a year ago maybe, can you just remind us what some of the key changes that you've made in the business to be able to start scaling it? And then what's some of the key obstacles that you're still working to address in order to continue growing the business? .

Brett Biggs

Yes, with that partnership and with that business in general, it's how do you make that easier for your advertisers? How do you make it more self-service? How do you get them the access they need to your space, but also spaces outside of your properties that you own, how do you help them advertise even outside of your properties? And then most importantly, how do you measure it? That's the Holy Grail for advertisers is how do you measure that what they did actually led to a purchase, and that takes adding new tools, adding new capabilities. And those are things that, with Trade Desk and with other things that we've done, making it simpler, making it more on demand and being able to make it more analytic for the advertisers is the name of the game there.

And I think the $2 billion business is indicative that we've been able to do some of that. And it's not just in the U.S. Things we're doing in India, Mexico, Canada, all of those markets can utilize what we're doing. So I think it's going to be something. That business is going to be very, very global for us.

Kendall Toscano

That's helpful. And then I guess if there's anything else you could share in terms of what Walmart is doing in insurance or maybe more on what different kinds of financial services you see Walmart's opportunities in, what are some of the things you're working on for 2022?

Brett Biggs

Yes, that insurance business, where basically we're a broker of sorts, is something that fits pretty nicely at the intersection of health care and financial services. It's really both. And then again, as part of helping our customers find the product that's right for them at the right price point for them, it's a confusing business. I mean buying insurance can be confusing. There's a lot of options. And if we can make that simpler for our customers and we can get them a better price point for the product that they're buying, again, it just fits incredibly well into our mission and where customers need help in their lives.

Kendall Toscano

And I'll see if any - if Robby has any follow-ups on some of your alternative profit streams. And then I know Robby also had some questions on Sam's Club and international.

Brett Biggs

Those are pretty big businesses, too.

Robert Ohmes

Yes. No, they are. I just - sort of a sidebar. Can you - fintech, what should I be thinking? When you say fintech, my mind...

Brett Biggs

Yes, it's broader than that actually. It's - that's a good point. I say fintech because that's what everybody kind of recognizes these days, but it's how do you make the financial part of people's lives easier? How do you help them manage their own P&L? How do you help them manage their memberships? Their subscriptions? Their - just the way they integrate with life, we're going to get so many touch points with that customer, that there's all kinds of ways that we can do that.

And one of the acquisitions that we've taken on is called ONE. That's actually what we're going to take on as the name of our entity. It's a great app. And so it's not just a service that they do today. It's what can you do with that app to make it bigger and get more integrated in with people's lives, and there are so many ways to do that.

If you think about what people do every day, just managing their own household and memberships and subscriptions and their own finances, it's complicated, and there's a lot of things that come at them. And again, if we can make that easier for them, that's what we want to do. And it just - and the benefit for us, of course, is they just get more and more into our ecosystem.

One of the first trips I took to India, I can't remember what, it would have been mid-2016 maybe, the first time I visited with a little bit, a little bit later in that with PhonePay and Flipkart. Some of the things that they were doing already, I came back to Doug and I was like, "Hey, you know all this stuff we've been talking about on kind of helping people integrate with lives, I've seen it. I've seen in India with what PhonePay and Flipkart are doing." And so we've taken learnings from there and I think there'll be more integration with international over time.

Robert Ohmes

And would fintech would be integrated with the Walmart app itself? Or would you be doing separate or...

Brett Biggs

Yes, I think that's - I think all things are possible at this point that we're obviously going to want to make it as easy as we can for consumers. We've done, as you know, a lot in the last couple of years to try to make our app simpler, integrating Walmart Pay better into our app, that you have to do that. And so you would assume that there are things that we can do to make that simpler as well with financial services.

Robert Ohmes

That's - we look forward to learning more about that in the next few years. Sam's Club is kind of humming, right?

Brett Biggs

Really humming, yes.

Robert Ohmes

Yes, and when they - when Sam's Club...

Brett Biggs

I thought we've done really well when I was there 10 years ago, way better now than it was 10 years ago.

Robert Ohmes

Well, it makes the CFO Walmart's life easier when Sam's Club's coming, right? I mean...

Brett Biggs

Yes, it does. It's a big business. It's a big business, a highly cash-generative business. And the thing that Sam's has done well, too, particularly the past few years when Furner was there and now with Kath there, is it's been a great place to develop talent. It's been a great place to develop technology. Things we've done with Scan and Go there, we've learned from Sam's about things we could do at Walmart.

The way they're interacting with their member, there's learning certainly at what we're going to do with Walmart+. But they've been a - the $75 million business, that seems kind of small because it feels that way inside of Walmart. But that $70 business, that really has been an incubator of ideas for us. And it's been great. I've never seen that business performing as well as it is right now.

New members, as you can get club store, you're getting more business into them, they become more dense. It's much easier to run the club. Everything about Sam's hums as you get volume through those buildings, and I'm really proud of what they've done.

Robert Ohmes

And anything we should think about there about comparisons? Or I mean, obviously, Sam's largest competitor doesn't seem to be slowing down at all.

Brett Biggs

No. It's - the warehouse club business has been a great business the last, call it, 10 years. It's been a fantastic business. And BJ has done well. Costco's been obviously done really well, but Sam's is holding its own really, really nicely. It's a great business.

Robert Ohmes

And then back to the kind of puts and takes questions. In international, anything you can help us think about a lot going on in international these days.

Brett Biggs

Yes.

Robert Ohmes

What are the - how should we think about upside, downside in 2022?

Brett Biggs

Yes. I like the structure of the portfolio. We've taken some tough choices over the last few years to reduce our exposure to some markets. But when you look at the four largest markets now, I look at all of them and see great potential. Mexico, Walmex is just one of the best retailers in the world. It's a phenomenal business, a multi-format, e-commerce. He and his team are doing an unbelievable job, and it's another one that just hums. It's absolutely home, so really proud of Walmex.

Canada has been a business that has been a very steady business for us, very high return business for a number of years. But they're thinking outside the box as well. Some of the things you hear us talk about in the U.S. with the ecosystem and new businesses, they're doing the same thing up in Canada and interacting with their customer in a different way. So I feel really good about what's going on in Canada within IO and the team up there.

India, you hear us talk a lot about India, and the Flipkart, PhonePay continue to perform well. It's a very competitive market. We know that. It will continue to be competitive, but I like our positioning there with both of those businesses. And so I think you'll continue to hear great things about India and our portfolio.

China business. Sam's in China is another one that hums. That is a fantastic business in China. Their supercenters have been a little bit slower than the club business, and then we have our joint venture with - or our partnership with JD over there, where we own a part of that company, which has been great from an e-commerce perspective. So as I look at each one of those markets, I feel good about international being a higher growth and higher return part of the business.

Robert Ohmes

Okay. I'm going to pause and just see is there - we're running out of time. Are there any questions in the audience?

Brett Biggs

You asked all the good questions.

Robert Ohmes

Apparently, I did. Anything you want to leave us with that we haven't covered or that you think we should be thinking about?

Brett Biggs

We always appreciate the interest in the company. I promise you, we don't take it for granted. And as we make decisions, we spend a lot of time obviously talking about how it impacts our customers, how it impacts our associates but spend a lot of time how it impacts our shareholders and how you will be impacted by decisions we take.

And obviously, it will always be impacted positively by the decisions that we take. But we appreciate your patience. As we've made investments over the past few years, I think those investments have paid off. We're going to continue to make investments in the business and also believe that those are going to pay off.

And I'm leaving the company after 22 years, but I've never ever felt as good as I feel right now about Walmart. It's in a great position financially. It's in a great position from a competitive standpoint. I feel wonderful about the team, and I just - I couldn't be more proud of the company.

Robert Ohmes

Is Walmart going to do an in-person annual meeting this year?

Brett Biggs

That's something that Kary is still working on, I think. We're always going to, I think, pick the right time when we feel like it's the right time to bring everybody together, talk to them about what we're going to do. We did the quarterly earnings call, which we didn't use to do that. So hopefully, you find that good. But at the right time, we will always bring everybody together, what's going on.

Robert Ohmes

I was just hoping I could see on stage with James Corden again one last time.

Brett Biggs

I don't know if Doug has plan. I'll leave that up to him.

Robert Ohmes

Well, listen, thank you again for...

Brett Biggs

Yes, my pleasure.

Robert Ohmes

For coming to the conference. It's a great presentation.

Brett Biggs

Thank you very much. Thank you. Yes, thanks.

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