As Walmart’s Doug McMillon moves toward the end of his tenure as CEO in January, the retailer’s third-quarter earnings show he’s achieved some of the goals he set out over a decade ago.
When McMillon became the chief of Walmart in February of 2014, a main focus of his was e-commerce and global growth.
"We'll invest aggressively in e-commerce and increase our small store rollout in the U.S., as we've done in several other countries, to deliver value and convenience,” McMillon said in a February 2014 earnings report statement. "We will continue to grow our global business by focusing on customers and serving them how they want to be served."
The retailer in April revealed it expects its U.S. online sales to turn a profit this year — and e-commerce is still on the rise.
“The notable thing about our e-commerce growth is the consistency of it across our markets,” Walmart CFO John David Rainey said on a call with analysts Thursday, who added that U.S. e-commerce sales grew 28%. “This was the seventh consecutive quarter of e-commerce growth above 20%.”
Walmart’s total revenue in Q3 grew 5.8% year over year to $179.5 billion, with global e-commerce net sales up 27%, the mass retailer reported Thursday. The online growth was fueled by store-fulfilled pickup and delivery, as well as the company’s third-party marketplace. Meanwhile, Walmart U.S. comparable sales increased 4.5%.
Much of the company’s omnichannel success is due to McMillon, according to analysts.
“McMillon spent a ~decade investing in digital, supply chain, and omnichannel capabilities,” Jefferies analysts led by Corey Tarlowe said in an emailed note last week, shortly after McMillon’s departure was announced. “His tenure was transformative, prioritizing investments in associates, digital and eCommerce capabilities, and supply chain modernization. These deliberate and technology-focused initiatives have driven robust financial performance and positioned Walmart as a leader in omnichannel retail.”
Walmart's U.S. lead John Furner was named as McMillon's successor last week, with the formal transition taking place Feb. 1. Both executives have worked at the company for decades, starting off as hourly store associates.
Looking to the future, incoming CEO Furner will maintain a focus on digital and e-commerce, but the lens has now shifted to AI. McMillon last week expressed optimism that Furner can shepherd the company through the “next AI-driven transformation” and agentic AI — an area in which Walmart has pursued bullish investment — was a hot topic during the Thursday earnings call.
Furner touted the company’s consumer-facing Sparky AI agent. He expressed excitement about new capabilities to come with Sparky over the next several months that will aim to “take more action” on behalf of shoppers.
“We're using agentic AI to help people think about the things that they may want to reorder, or, in other words, give them nudges about staying in stock,” Furner told analysts.
The retailer is able to use its international segment to test new technological capabilities in different markets, Kathryn McLay, president and CEO of Walmart International, said on the call.
An example of that is the company’s “Carrito Listo “capability launched in Chile.
“We actually create customers’ orders for them, send them a WhatsApp prompt to ask them if they're interested in buying that basket,” McLay said. “They go onto the app, and they can see we've created a basket for them that actually has all the brands that they normally buy in the kind of intervals that they like to buy it, and they have full agency over whether they want to accept that basket, whether they want to add to the basket, whether they want to take from the basket.”
The company reported its international business net sales increased 10.8% to $33.5 billion in the quarter. Walmart also raised its guidance for the full year, now expecting net sales growth of between 4.8% and 5.1% compared to its previous expectation of a 3.75% to 4.75% increase.
“Walmart delivered a comp sales and earnings beat,” Roth Managing Director Bill Kirk said in an emailed note. “With accelerating e-commerce and advertising business, we believe Walmart is strongly positioned for the upcoming Holiday spending period.”
