00:00Yeah, I think it's really the U.S. same-stair sales miss.
00:02So when you look at that number and you look at why they missed, I think the miss is largely
00:08due to the pharmacy deflation issue.
00:10And that issue isn't a one-time issue.
00:13It's not going away just this quarter.
00:15Last quarter, it was 100 basis point impact to the comp sales.
00:19This quarter, it was 125 basis point headwind.
00:22So clearly increasing.
00:24And the worry is for the next two quarters, you'll continue to see that headwind.
00:29And if trends continue, it could be even more pronounced.
00:33So that's what's causing, I think, investor concern.
00:36And the other thing is when you look at the comp, right, the comp that Walmart has, the U.S.
00:41comp, if you strip out e-commerce, the comp is negative.
00:47So what does that mean for the stores?
00:49I don't think negative is so negative because online is supported by the stores.
00:57Walmart's online business wouldn't be growing at a 20% plus clip for the last so many quarters that I
01:03can remember if they didn't have the store base.
01:05So I think they do go hand in hand in terms of the way they operate.
01:09Okay.
01:09But what comes next?
01:10I mean, how do they navigate this miss?
01:14So the miss is going to be reflected even in the upcoming quarters, which is why you're seeing investors react
01:21the way they are.
01:22What they can do is push the pedal on price.
01:24If you think about where the consumer sits today and just the desire to stretch that dollar further, Walmart's in
01:30a good place to do that.
01:31They've got tariff refunds and they can put them back in price, which is the intent.
01:34So as they press that pedal harder and drive value to their consumers, they should be able to draw in
01:41more spend.
01:42And that's really what we're looking for.
01:44We're looking to see that traction increase as they continue to bring value into the funnel.
01:49So I know you don't say buy this or sell this stock, but when the stock is down 10%
01:57intraday, does it feel like based on your analysis and looking at the fundamentals here of Walmart, Poonam, that it's
02:03an overreaction potentially?
02:05Well, I think it's a temporary overreaction in that it's not driven by the underlying fundamental health of the business,
02:12right?
02:12So the pharmacy deflation isn't something that's related to execution or a miss from Walmart or that consumers aren't buying
02:20pharmacy there.
02:21So that's not the issue.
02:23So the underlying health of Walmart, I think, remains very much intact.
02:27That said, it's an issue that's not going away either in the back half of the year.
02:31So you do have to be mindful of that.
02:33And in terms of where Walmart trades, outside of the buy, hold, sell, when you look at the Walmart multiple,
02:39it's clearly at a premium to where it's traded in the past.
02:42And part of that premium is deserved because of its increasing online penetration and growth that it's had.
02:48And I don't expect that to slow.
02:50So when I think of the Walmart business, I think e-commerce advertising are going to be two big pillars
02:54of it that are going to drive exponential growth for the coming years.
02:59We have to ask you about what the earnings results say about the consumer.
03:04I mean, you watch Walmart, but you have a really good read on a lot of other retail names out
03:09there.
03:10What is the takeaway on the state of the consumer from these results?
03:14I think the consumer is stretched.
03:17I mean, especially when you look at the low value, the low end consumer, they are trying to maximize every
03:23dollar that they have.
03:24And that continues as we move into the most important selling season of the year, which is holiday and back
03:30to school.
03:30So I do think they're making choices.
03:33I think they're making tradeoffs.
03:34I think they're looking at private label.
03:36And I don't see that going away, especially in the current environment that we're in, where gas prices are high.
03:43But remember, we're going into heating season, right, in October.
03:46So heats are going to start to turn on, electric and utility bills will go higher.
03:52So the consumer will only get more and more strapped if we see the continued impact from higher gasoline prices
03:59and oil prices.
04:00I always find it interesting, Poonam, when I see the headline from Walmart, they see continued growth from their wealthier
04:05consumers.
04:06Is that becoming, this came from the CEO, is that increasingly becoming a bigger part of Walmart in terms of
04:12driving or is it still small?
04:14So I think you have to think about where is that wealthier consumer coming into Walmart from?
04:19My impression is that it's not in the stores.
04:22It's in the online channel.
04:24So it's a Walmart plus part of the business that is growing at materially higher rates than its store business.
04:30So when you.
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