fatter, too: operating income (earnings before interest and taxes) was up by almost 10 per cent on last year. The bottom line, net income, came in at $5.3 billion, an increase of nearly 180 per cent. The company returned $2.8 billion to shareholders in dividends and share repurchases, an increase of $600 million on the same quarter a year ago. Comparable sales in the US, excluding Sam’s Club, grew by 3.8 per cent, including a 22 per cent gain in e-commerce. E-commerce, in turn, is benefiting from significant growth in the number of marketplace sellers and accelerating delivery speeds. In the past year, Walmart delivered 4.4 billion items on the same or next day, and almost 20 per cent of those within three hours. Walmart states that it is continuing to gain market share in the US, propelled by higher-income households trading down. Strongest comp growth was in pharmacy, followed by grocery. Meanwhile, Sam’s Club US comparable-store sales, excluding fuel, grew by 4.4 per cent. Leading categories were food and pharmacy. The only fly in the ointment in the last quarter was that the company closed all of its healthcare clinics during the quarter, conceding that it could not continue in a line of business where the “reimbursement rates and cost to serve” made it uneconomic. Making things happen Retailers have developed a robust inventory of excuses over the years to account for their results: adverse weather, low consumer confidence, external conflicts, and impending elections, to name just a few. The one thing these excuses have in common is that they all blame events over which the company has no control. John David Rainey, Walmart’s chief financial officer, distinguishes between executing well on things that can be controlled and waiting for the external environment to have a positive impact on business. In characterizing the results for the April quarter, he told investors on May 17: “This is one where very much we made things happen versus things happening to us”.   Virtuous circles in the e-commerce business Rainey shone a particularly bright light on the company’s progress in various aspects of e-commerce, including fulfillment services for Marketplace sellers and a reduction in shipping costs from stores and warehouses. As the number of e-commerce customers grows, so does the geographic density of the customer base, which drives down the cost of ‘last mile’ delivery. (Put another way, the cost of delivery to a particular neighborhood is spread over more customers.) Rainey said advertising revenues were also jumping, led geographically by the US, Flipkart and Walmex. This, in turn, was another virtuous outcome of growth in the number of sellers and traffic to the Marketplace: More sellers attract more eyeballs that attract more advertising revenue. Efforts at increasing memberships (Sam’s Club and Walmart Plus) were also bearing fruit. Walmart’s axe to grind Walmart has an axe to grind with anyone who dares suggest that it has been the beneficiary of the inflationary environment in recent years. CEO McMillon was quick to point out that the strong results have been generated by growth in the number of units sold and transaction counts, not because of inflation. In fact, he said that the general merchandise categories had experienced mid-single-digit deflation. With specific reference to e-commerce, Rainey was clear on the same point, saying that many companies had experienced terrific e-commerce growth during Covid-19 but subsequently returned to pre-Covid ‘normal’. This was not Walmart’s experience: the company had gone from a position of weakness in e-commerce before Covid to a position of strength now, with a steady ramping up and no reversion. This was a structural improvement and not just a short-term one. With characteristic modesty though, Rainey also said that this improvement was piggybacking on a ‘permanent’ change in consumer behavior. International International sales, adjusted for currency fluctuations, grew by 10.4 per cent, to $29.4 billion in the first quarter. Leading the international segment were Walmex (+10.8 per cent) and China (+16.2 per cent). Over the past 12 months, the company has added 170 new stores internationally. Walmart’s e-commerce penetration in China is now 43 per cent. In Mexico, McMillon said, the number of marketplace sellers grew by 50 per cent and the SKU count by nearly 80 per cent.  E-commerce in the international segment is also being boosted by the company’s focus on speed of delivery. Same-day delivery of orders in India rocketed up 150 per cent during the quarter. Meanwhile, 55 million orders in China were delivered within an hour.  In China, it was Sam’s Club (the member count is up 25 per cent on the year) as well as e-commerce pushing up total sales. China net sales, adjusted for currency fluctuation. reached $5.7 billion, representing an increase of 16.2 per cent on last year. The importance of not setting targets CEO McMillon: “We expect to continue to earn healthy levels of sales growth and simultaneously grow profit faster than sales this year while managing our price gaps and investing in our associates at the same time.” Those are fighting words, and backed by a track record that makes it credible. One of Walmart’s philosophies helps keep the company focused on executing exactly where it needs to: it eschews a common habit of retailers of publicizing and committing to grandiose targets. (Uniqlo’s target of having 200 stores in North America by 2027 is a high-profile recent example.) CFO Rainey: “Very often, companies focus on some target, call it $1 billion, and those targets have a beginning and an end to them. And when you approach it that way, sometimes, in particular like when you’re reactionary around that versus operating from a position of strength, you make short-term decisions like freezing marketing dollars or freezing heads, and those costs have a habit of eking their way back into the system. That’s not what we’re doing here. There is no beginning and end to this.”