Gemini judging

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Transcript id: WMT_3367424

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{'audio': 'https://finnhub.io/api/redirect?urlType=transcripts-audio&id=WMT_3367424', 'id': 'WMT_3367424', 'participant': [{'name': 'Stephanie Schiller Wissink', 'description': 'executive', 'role': 'executive'}, {'name': 'Doug McMillon', 'description': 'executive', 'role': 'executive'}, {'name': 'John Rainey', 'description': 'executive', 'role': 'executive'}, {'name': 'Simeon Gutman', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Kelly Bania', 'description': 'analyst', 'role': 'analyst'}, {'name': 'John Furner', 'description': 'executive', 'role': 'executive'}, {'name': 'Paul Lejuez', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Kathryn McLay', 'description': 'executive', 'role': 'executive'}, {'name': 'Christopher Nicholas', 'description': 'executive', 'role': 'executive'}, {'name': 'Katharine McShane', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Michael Lasser', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Rupesh Parikh', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Krisztina Katai', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Robert Ohmes', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Scot Ciccarelli', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Edward Kelly', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Peter Benedict', 'description': 'analyst', 'role': 'analyst'}, {'name': 'Seth Sigman', 'description': 'analyst', 'role': 'analyst'}], 'quarter': 3, 'symbol': 'WMT', 'time': '2023-11-16 13:01:00', 'title': 'WMT - Earnings call 3 2024', 'transcript': [{'name': 'Operator', 'speech': ["Greetings. Welcome to Walmart's Fiscal Year 2024 Third Quarter Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Steph Wissink, Senior Vice President of Investor Relations. Steph, you may begin."], 'session': 'management_discussion'}, {'name': 'Stephanie Schiller Wissink', 'speech': ["Thank you, and happy holidays, everyone. Joining me today at our home office in Bentonville, Walmart's CEO, Doug McMillon; and CFO, John David Rainey. Doug will begin with his reflections on the quarter and year. David will follow with his view of enterprise results and segment highlights using our financial framework of growth, margins and returns before speaking to our updated guidance for the year. For specific segment level results, please see our earnings release and accompanying presentation on our website. Following prepared remarks, we'll take your questions. At that time, we will be joined by our segment CEOs: John Furner from Walmart U.S.; Kath McLay from Walmart International; and Chris Nicholas from Sam's Club. [Operator Instructions]", "Today's call is being recorded, and management may make forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the SEC. Please review our press release and accompanying slide presentation for a cautionary statement regarding forward-looking statements as well as our entire safe harbor statement and non-GAAP reconciliations on our website at stock.walmart.com.", 'Thank you for your interest in Walmart. Doug, over to you.'], 'session': 'management_discussion'}, {'name': 'Doug McMillon', 'speech': ["Good morning, everyone, and thanks for joining us to talk about our third quarter results and how we're seeing the rest of the year. Our value proposition continues to resonate with customers, helping us gain share and drive eCommerce growth. We're on track to grow adjusted operating income at a faster rate than sales for the year, consistent with what we discussed at our investor meeting earlier this year.\r\nWe had strong revenue growth for the quarter across each of our segments. Comp sales for Walmart U.S. were 4.9% and 3.8% for Sam's Club U.S. Sales for Walmart International were up 5.4% in constant currency, led by Walmex and China. Sam's Club continues to perform well, both in Mexico and China. And while strength was broad-based for Walmex, our Bodega Atura business is worth calling out as it continues to deliver outstanding growth.", "eCommerce sales were up 24% in Walmart U.S., 16% in Sam's Club U.S. and 15% globally. Timing of our Flipkart Big Billion Days event, which moved from Q3 last year to Q4 this year, affected comparisons in our international segment, leading to a decline of 3%. So we'll see the benefit from the timing shift as we report next quarter.", 'Across markets, the team did a nice job driving our seasonal events. Our in-stock and inventory levels are in good shape. We finished down 1.2% in inventory for the total company, including down 5% for Walmart U.S. Both our top line and adjusted EPS came in better than what we projected at the beginning of the quarter, but we could have done a better job on expenses, which is reflected in adjusted operating income growing less than we expected.', "We had a couple of unexpected expense increases in SG&A, and you'll hear more about those when John David walks through the numbers.", "In the U.S., pricing levels in many food categories continue to be a concern. Overall, our product costs are up versus last year, and they remain up even more on a 2-year stack, which is putting pressure on our customers. Meat prices are high, but we're happy to see lower pricing in dairy, on eggs and with chicken and seafood. The pockets of disinflation we are seeing are helping, but we'd like to see more faster, especially in the dry grocery and consumables categories.", "The other good news is that general merchandise prices continue to come down. GM is down low to mid-single digits versus last year. That enables us to roll back pricing, which will help our customers during this holiday season when general merchandise is so important for gift giving. We still see pressure from mix, including outside the U.S., which we expected, but I like the market share gains we're seeing in this category.", "In the U.S., we may be managing a period of deflation in the months to come. And while that would put more unit pressure on us, we welcome it because it's better for our customers.", "When I look at our P&L, it's continuing to change shape. Mentally, I break it down as a combination of a traditional retail P&L and a newer version that starts with our digital businesses. It flows from first and third-party eCommerce pickup and delivery to businesses like membership, advertising and fulfillment as a service. It includes some faster-growing, higher-margin components that combined with the more traditional P&L, gives us a business model that's more profitable in percentage terms as it grows.", "We saw strong growth in all these areas for the quarter. And when you put it together with the supply chain automation work we're doing, you get a more sustainable business that can grow more effectively over time and create a better mix along the way.", "Marketplace is one of our engines for these mutually reinforcing businesses, meaning that marketplace growth pulls other businesses like fulfillment through. Back in September, we held our first ever Marketplace Seller Summit. We hosted thousands of current and potential sellers to let them see firsthand our commitment to this business and how we'll grow it together.", "Since the beginning of last year, we've more than doubled the number of items available to customers on our U.S. marketplace. It's an important piece of what we're building, and it's growing fast and not just in the U.S. We have a unique opportunity to grow in India, Mexico, Canada and Chile. We love the opportunity to grow our assortment this way. So customers can get what they want, when and how they want it.", "We're making shopping easier and more convenient. Our Net Promoter Scores for pickup and delivery in Walmart U.S. are improving, and we started using generative AI to improve our search and chat experience. We've released an improved beta version of search to some of our customers who are using our app on iOS. In the coming weeks and months, we'll enhance this experience and roll it out to more customers.", "When I step back and look at the company overall, I love what we're building and how we're building it. We've got a good hand to play and a strong team making things happen. It's our recipe for growth and improved margin and returns we've been discussing with you.", "EDLP prices are a foundational component of us fulfilling our purpose. We bring EDLP to life on a year-round basis by doing things like offering a Thanksgiving meal in the U.S. and Canada that costs less than last year, are offering tremendous value for things like fashion, electronics and seasonal decorations and helping remind people that when they're looking to buy toys, we're the place to come because we have the right product at the right price.", "This same focus on purpose and execution came through when I was visiting Chile, Canada and China earlier this quarter. It was my first time back in China since before the pandemic. Our team there runs some of the most incredible Sam's Clubs in the world, and they continue to be a leader for us in terms of digital penetration and innovation.", "At a wrap-up, I know we're all concerned about events across the world or acts of terrorist, political unrest, impacts from storms like those in Mexico from Hurricane Otis, the pressure we're feeling from stubborn inflation in some categories and other challenges beyond our control.", "As for our company, we care about everyone. We want to be a place where literally everyone feels comfortable and welcomed to shop or work. We want to live our values and create a warm, safe and fun place for the hundreds of millions of people that will shop with us in the days and weeks ahead. I'm grateful to be part of this big team, grateful to work alongside our associates.", "Now I'll turn it over to John David."], 'session': 'management_discussion'}, {'name': 'John Rainey', 'speech': ["I'd like to start by thanking our customers, members, associates and partners for helping us deliver a good quarter. We're pleased overall with how the team executed and how our strong value proposition and omnichannel strategy continue to resonate with customers. We're gaining share, seeing strong eCommerce growth and excited about the contributions from higher-margin businesses like advertising.\r\nSales grew more than 4%. Gross profit was better than expected and we exceeded our guidance for EPS. These results reinforce the benefits of our highly diversified business with broad-based contributions across segments and markets, channels and formats and strategic growth areas.", "While we're pleased with our top line results, operating income was below our guidance due to higher-than-anticipated expenses, largely certain legal accruals. I'll provide more details on guidance shortly but the key takeaway is that we're raising our full year sales and EPS guide while reiterating our prior operating income guidance. We expect the relationship between profit and sales growth to favor profitability in Q4 and for the full year to align with our goal of operating income growing faster than sales.", 'Now let me review the key financial highlights for Q3 using our financial framework of growth, margins and returns.', "First, growth. Constant currency sales increased 4.4% or nearly $7 billion. Importantly, we saw traffic growth across both in-store and digital channels. All three operating segments experienced mid-single-digit sales growth with comp sales for Walmart U.S., up 4.9%; and Sam's Club U.S. up 3.8%, excluding fuel. International grew sales 5.4% in constant currency with Walmex sales up more than 9% and China up 25% with strong performance in Sam's Club and eCommerce.", "The timing of Flipkart's Big Billion Days pressured international sales growth as the event moved from Q3 last year to Q4 this year. So we expect the timing to be a benefit to Q4's growth rate for the segment. PhonePe also continued its strong momentum with annualized TPV, or total payment volume, reaching 1.2 trillion on nearly 5.8 billion monthly transactions. And PhonePe recently achieved an impressive milestone, eclipsing 500 million registered users.", 'We continue to grow share in key categories, particularly in Walmart U.S. grocery where we delivered positive comps and saw strong share gains in both units and dollars. Grocery inflation moderated nearly 300 basis points from Q2 levels to a mid-single-digit increase versus last year. But on a 2-year stack, it was still elevated at a high teens percentage.', 'We see our customers showing ongoing discretion and seeking value to manage within their household budget. While general merchandise sales were down low single digits year-over-year in Q3, the rate of change was stable to Q2 levels and -- share across categories.', "As we enter the holiday season, we're working hard to lower grocery prices to ease the pressure for customers, giving them more capacity for general merchandise spend.", "Our business is rooted in a timeless purpose: To save customers money so they can live better. Against any economic backdrop, we're there for customers, how and where they need us. And we're making shopping with Walmart and Sam's Club more convenient.", "Omni services, including pickup and store fulfill delivery continue to drive strong growth, leading to a 24% increase in Walmart U.S. eCommerce sales and 16% growth at Sam's Club. Multi-channel shoppers are more valuable, engaging more often and spending more with us. Pickup and delivery for Walmart U.S. has been a key source of growth and share gains among upper-income households and has become the most productive channel for acquiring Walmart Plus members.", "In international, Walmex' expansion of omni offerings led to 1.5 million Bodega store-fulfilled digital orders in Q3. In Canada, we continue to roll out our unlimited next-day store delivery subscription called Delivery Pass, which is now available from 2/3 of our Canada stores. And I was in China recently where our business is nearly a 50-50 split of physical and digital. I was impressed with how we're serving omni customers with speed and accuracy through new engagement and delivery models.", "Turning to margins. Gross margins expanded 32 basis points, reflecting the timing shift of Big Billion Days in India and lapping last year's LIFO charge at Sam's Club U.S. Walmart U.S. gross margins increased 5 basis points, reflecting lower markdowns in supply chain costs, but we're still seeing ongoing category mix pressure as health and wellness and grocery sales outperformed general merchandise.", "Continued disinflation, along with the success of our merchants at Sam's Club and bringing down the cost of inventory resulted in us not taking the expected $50 million LIFO charge in Q3. We no longer expect any further LIFO charges in Sam's Club this year.", "As we've said previously, over the next several years, we expect margins to move higher as we modernize our supply chain and scale higher-margin growth initiatives. We made good progress on both during the quarter.", 'We continue to deploy capital to build technologies and optimize our next-generation supply chain with automation and productivity benefits starting to appear in our results. We now operate nine regional distribution centers servicing U.S. stores with varying levels of automation with six supercenters in active stages of construction. Currently, more than 15% of stores receive merchandise from these facilities, helping to get product to shelves faster and more efficiently.', 'During the quarter, we opened our third next-generation eCommerce fulfillment center. These 1.5 million square feet facilities are expected to more than double the storage capacity, enable 2x the number of customer orders fulfilled daily and will expand next- and 2-day shipping to nearly 90% of the U.S. including marketplace items shipped by Walmart fulfillment services. They also unlock new opportunities for our associates to transition to higher skilled tech-focused positions.', "To support the store-fulfilled digital business, we're on track to have seven stores with automated market fulfillment centers or MFCs, operational by the end of this month. These MFCs stock thousands of the most sought-after items and are expected to increase order capacity and productivity while also increasing inventory accuracy, which helps us deliver perfect orders for customers.", "As we focus on improving eCommerce margins, we're making good progress in lowering digital fulfillment cost and densifying the last mile by tapping our broad store and club network. Over the past year, Walmart U.S. has increased the percentage of digital orders fulfilled by stores by 800 basis points and Sam's Club fulfills nearly 60% of online orders from its clubs.", "With the growth of our Spark Driver platform, we've lowered store-to-home delivery costs by 15%, even as we shortened delivery times to same day for more than 80% of our stores and in some cases, as quick as 30 minutes. As we scale Walmart Go Local, we're densifying the last mile, and we're approaching a milestone of 12 million deliveries for other retailers with this service.", "I'd like to touch on our portfolio of higher growth initiatives. These businesses reinforce our core omni retail model and are key to driving operating income growth ahead of sales over time. In Q3, this portfolio positively contributed to gross margins. Global advertising grew approximately 20% in Q3, with Sam's MAP growing over 27% and Walmart Connect up 26%.", "As an illustration of the omnichannel benefits of our ad platforms, more than 75% Sam's MAP active advertisers are investing in search and sponsored ads as in-club sales attribution has improved returns of digital ad spend by over 30%. International's ad revenue growth was impacted by the timing of Big Billion Days, but we're on track to deliver strong growth of approximately 45% for the full year.", 'Moving to marketplace and fulfillment services. Customer engagement continues to validate our strategies to invest in ways to grow this business on a global basis. As Doug mentioned, we held the inaugural Marketplace Seller summit to help accelerate our marketplace growth.', "For cross-border sellers in the U.S., we're expanding access to more customers beyond the U.S., Canada and Mexico by opening our eCommerce marketplace in Chile to cross-border products next year. Over the past year, we've increased marketplace sellers by more than 20%, and the number of sellers utilizing Walmart fulfillment services is up over 55%.", "Next, membership remains a compelling way we deepen engagement with our customers. Sam's Club membership income grew over 7%, reflecting record member counts and plus member penetration. During Q3, we held events that were focused on member acquisition and digital engagement. We'll take a similar approach again during Q4, offering discounted access to Walmart+ memberships while providing members early access to the best savings event throughout the holiday season.", "Turning back to the middle of the P&L. SG&A expenses deleveraged 37 basis points on an adjusted basis, impacted by higher year-over-year wage-related costs in Walmart U.S. including higher variable pay expenses relative to last year when we were below our planned performance. Store remodel costs were also higher as we rolled out 117 of our flagship design stores earlier this month. And legal expenses increased. Lastly, the timing shift of Big Billion Days pressured international expense leverage in Q3. We'll see the benefit come through in Q4.", "Third quarter adjusted operating income grew 3%, including 270 basis points of currency tailwind, while adjusted EPS of $1.53 increased 2% and compared favorably to guidance of $1.45 to $1.50. Relative to our guidance, Q3 EPS benefited by $0.01 from releasing the LIFO reserve we had earmarked for Sam's Club.", "Moving to returns. Over the last 12 months, sales have grown more than 60% and operating income increased about 22%. And when combined with a disciplined capital approach, return on investment improved 130 basis points to 14.1%. The primary driver was lapping last year's Q3 charge related to the opioid legal settlement framework. ROI also reflects some benefits from productivity initiatives that we initially expected to realize in FY '25. We continue to expect our ROI to increase over the coming years. In addition to our strategy, our financial position is an advantage and enables us to compete in an increasingly dynamic retail environment.", "Turning to guidance. We're confident in our agility and our ability to execute, and we're focusing our investment in areas where we can widen our omni advantage, deepen engagement and drive sustained growth in new revenue streams. We like our position relative to competitors as we've maintained strong price gaps and increased share while preserving flexibility to respond to competitive dynamics, but we're not immune from the vagaries of the economy.", 'We see our customers showing ongoing discretion and making trade-offs to be able to afford the things they want, given the sustained high cost of the things they need.', "Recently, we've experienced a higher degree of variability and weekly performance in between holiday events in the U.S., including seeing a softening in the back half of October that was off trend to the rest of the quarter.", "Sales during November have turned higher as unseasonal weather abated and we kicked off holiday events. So sales have been somewhat uneven, and this gives us reason to think slightly more cautiously about the consumer versus 90 days ago. We still expect sales growth to moderate in Q4 versus prior quarters as grocery inflation further normalizes towards historic levels. And we're encouraged by the increased traffic and share gains we've seen and expect them to continue.", "As such, we're modestly raising our full year sales guidance to 5% to 5.5% from 4% to 4.5% previously, primarily to reflect Q3's outperformance. For operating income, we're maintaining the guidance range of 7% to 7.5% growth, in addition to the 40 basis points of unexpected legal expenses in Q3. We also expect to record charges in Q4, totaling approximately 20 to 30 basis points related to unplanned store closures and recovery costs associated with the recent hurricane near Acapulco, Mexico. This impacted 28 of our stores and less than half of them have been reopened at this time.", 'Partially offsetting these costs is the approximate 40 basis point benefit from lower-than-expected LIFO charges compared to our prior guide. The net effect is a 20 to 30 basis point headwind to our prior guide and as such, we currently expect to be in the lower end of the operating income growth range for the year.', 'We expect merchandise mix pressure to continue in Q4 with grocery and health and wellness sales rates outpacing general merchandise and potentially be a bit more pronounced given the uncertain consumer environment.', "Based on Q3 results, and less of an increase in interest cost for the year than we previously expected, we're raising our full year EPS guidance range to $6.40 to $6.48.", 'In closing, let me reiterate what I said previously, aligned with our financial framework, we expect the relationship between profit and sales growth to favor profitability in Q4 and for the full year operating income to grow faster than sales.', "We like our competitive position. Our financial results clearly demonstrate that our omnichannel strategy is winning. We're growing our share across categories, deepening customer engagement across channels while investing in areas to widen our competitive advantage. The holidays are here and our value proposition resonates with customers looking to save money as they celebrate.", "Operator, we'd now like to open the line for questions."], 'session': 'management_discussion'}, {'name': 'Operator', 'speech': ['[Operator Instructions] And our first question today comes from the line of Simeon Gutman with Morgan Stanley.'], 'session': 'management_discussion'}, {'name': 'Simeon Gutman', 'speech': ["I have one question. I'll make it maybe two parts. The first part, the legal expense, it -- so that we can judge whether or not we should keep it in. It sounds like you're keeping it in. I'm not sure you're able to share what the nature of it is, but it seems like it was unexpected. So if there's any more color on it?", 'And then the second real question is alternative revenue and profit. Was it hidden in any way this quarter? Do we get an inflection into next year? That seems to be the big investment question. And are we going to see it ramp up? And does it happen in a certain period or it just continues to build?'], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Simeon, I'll start and others may want to jump in. On the legal expenses, those were related to -- largely related to prior periods, and that was not anticipated within the quarter, is around $70 million to $75 million. So we would not expect that to recur into the fourth quarter.", "On the alternative revenue, perhaps I'll start and let others jump in. Our plan is -- that we shared at better day is somewhat dependent upon the level of investment that we're in and seeing improving unit economics, but it's also growing these parts of our business that are much higher margin. We talked about the growth in advertising across all segments, quite frankly. And international, while it was lower in this quarter, we'll see strong growth for the year.", "All of these as they become a larger part of our overall business mix are going to have an outsized contribution to our margin performance. So if you go back and you think about what we shared at Investor Day saying that we expect over the next several years to grow sales 4% and operating income greater than 4%, we would expect with each passing year, we're going to see a greater contribution from these higher-margin profit streams, which help us to improve our margin each year."], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ['Simeon, this is Doug. I would just add that I think you should have it in the continue to build category rather than an inflection.'], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Kelly Bania with BMO Capital Markets.'], 'session': 'question_answer'}, {'name': 'Kelly Bania', 'speech': ["Just another follow-up, I guess, on the legal expense, assuming that impacted the U.S. EBIT number, but maybe you can clarify that. And just anything in particular that impacted the U.S. EBIT beyond maybe some unexpected expenses. Did that come in relatively in line with your expectations? And I guess that's sort of my first question.", "And then longer term, as you think about this plan to grow EBIT faster than sales in coming years, anything you're seeing with the consumer, and it sounds like it's still choppy, that maybe leaves you to reconsider how much you might flow through to the bottom line?"], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Sure. I'll start, and then John's probably going to want to jump in. Yes, the legal expenses hit the U.S. segment. There were some other items in there. I'll point out that we spend a little more on remodels. We did an all-time high level of remodels in the quarter. But this is an -- this is investing in our business, which we definitely want to lean into.", "We're excited about the returns we're seeing around that. We're excited about the returns we're seeing on eCommerce. And so there were some investments related to that. But the vast majority of the delta between our guidance and actual performance was related to the legal accrual.", "In terms of our long-term plan and as it pertains to like possible changes in the consumer, I think our value proposition resonates more than ever when the consumer is pressured. And we've seen this year that they not only are coming to us for the value that we provide, but also for the convenience. And these are areas that we're investing in.", "So we have a ton of conviction and the strategy that we have in place and our ability to execute on that. We should separate that from calling out some potential weakness or wobbling among the consumer that we saw in the back half of October. But we're very excited about the plan we have in place."], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Kelly, it's John. First, I'm also excited about the top line results of -- and then eCommerce at 24%, and the team has made a lot of improvements, and they should get the credit for that.\r\nYou heard a couple of things there. One about remodels, as John David mentioned, we had 117 remodels complete all in November 3. We think that's the largest number of remodels we've ever had complete in a single day. And then if you add together late October and November, 197 remodels. And those remodels have improved apparel, improved home, they have wider aisles, are really happy with the way the signing at. And they also have more investment for our online pickup and delivery business, which is a key catalyst for eCommerce growth and help us with being flexible for customers in any type of situation they want to shop in.", 'So there are some costs associated with that in the quarter, but we feel great about this being investments for the long term.'], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ["Kelly, this is Doug. Related to the last part of what you asked about, I don't think there's anything that causes us to think operating income won't grow faster than sales. We've had really strong sales performance now for a few years. Obviously, we're impacted by what happens in our environment, but we expect to grow share. We expect to have a healthy top line.", "And as it relates to operating income, we've got a really good multiyear plan with two primary dimensions. One is the automation investments that drives productivity improvements. And the other dimension is related to how the digital businesses change the shape of the income statement. Both of those things will be true, and it's a multiyear plan that shows progress along the way.", "So you guys, from quarter-to-quarter, year-to-year, will see us make progress. And not every quarter maybe up into the right in every category. But if you look at what happens from a trend point of view, those are the things we expect to deliver. And because operating income is growing faster than sales, we -- our plan requires that we grow return on investment at a higher rate over time. That's the plan."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Paul Lejuez with Citi.'], 'session': 'question_answer'}, {'name': 'Paul Lejuez', 'speech': ["You have a really big eCom business that continues to grow at a rapid pace. I'm curious if you could talk about what's driving that growth from a traffic versus ticket perspective and how the growth in the marketplace sellers that you've seen are contributing to that growth. So curious if you could talk a little bit about general merchandise performance online. I think you threw out some numbers last quarter about certain categories on general merchandise side. Would love to hear how they performed online this quarter."], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Paul, it's John. I'll start with Walmart U.S. and then pass it over to Kath and Chris to talk about the other segments. I think as you step back and look at the growth, one, we're pleased with our online and pickup delivery business from stores. We have strengthened food. The team has continued over the last few years to expand our capacity. And more importantly, they've made improvements on key metrics like the one we call Perfect Order, which is getting customers what they want, when they want. And I think that's a reflection of better in-stock and food overall. And that's helped us with our share gains in the food category.", "But the marketplace, really pleased with the progress the team has made with Latour and Manish having the first summit, as we mentioned earlier. In the quarter, we've seen more sellers come online. Our assortment has grown significantly. And just this week, I was in one of the new fulfillment centers that John David mentioned in Lancaster, Texas, which is a great facility, managed by a very qualified team. And it's, of course, reassuring to see the amount of marketplace inventory that's coming in and seeing the number of marketplace sellers, which we're grateful for those sellers who trust us to do their fulfillment, and that's been promising.", 'Now the month of November, we had our first event last week and getting into our holiday season. We have a long way to go from here until the end of the holidays, but really pleased with the results in marketplace, which is of course, reflective of results in apparel and gifting and other categories that are in line with the question you asked about general merchandise.', "So these are important businesses because they help customers shop the way they shop, when -- the way they want to shop, when they want to shop. And marketplace over time, of course, will be a key driver to some of the other businesses like advertising. As more sellers find customers on the Walmart marketplace, they'll want to use services like our fulfillment services and our advertising business. So turn it over to Kath to talk about international."], 'session': 'question_answer'}, {'name': 'Kathryn McLay', 'speech': ["Yes. Thank you for that question. I think if you look at our eCom result, it's [ Mir3 ], and that I don't think is a really -- it's distorted by BBD. If you actually look at the underlying growth across the businesses, Walmex grew by 16% from an eCom perspective. Canada grew in eCom by 16%. A part of that was rolling out delivery path to the number -- a significant number of stores. If you look at China, their business grew -- the eCom business grew by 38%.", 'So I think all of the teams are really focused on really getting the disciplines right of Perfect Order and making sure that the experience to the customer is delightful.', "I think we continue to learn from each of the different businesses. The Flipkart team were here with us yesterday, and it's fascinating to see what they're learning through using gen AI in the -- through Big Billion Days. There's just some really clever capability that make it very seamless and easy to be able to shop online.", "And then if you look at it from a marketplace perspective, we launched in Mexico, Canada, Chile and South Africa marketplace during the last 12 months. Obviously, Flipkart is our largest and most -- and more mature marketplace business. But we're seeing accelerated marketplace growth also through our cross-border trade. We opened that through Mexico and Canada to U.S. cross-border sellers. And lastly, we launched Walmart fulfillment services in Mexico, Canada and South Africa in the past 12 months.", "So we've seen good results, but we're really positive about the growth potential of both marketplace and Walmart fulfillment services."], 'session': 'question_answer'}, {'name': 'Christopher Nicholas', 'speech': ["That's it's an exciting time. Paul, thanks for the question. I think what's really interesting for all of us, but definitely for Sam's is that members want this. And so we're giving them what they want. And we're at 13% of sales, 16% growth in the quarter. But we think it's a really huge opportunity.", "And as I think about eCommerce for and omnichannel sales for Sam's. I think about a digitally connected member. So Scan & Go teaches our members that were in digitally relevant business and they look to shop online and the -- whether on the web or on the apps, and we feel really good about that. And we've got all-time highs in that space.", "The other thing that's interesting is as we look at the new members, we've got an all-time high number of membership in Sam's. And a lot of those people that are coming in now with digitally engaged members, they're coming in and they're buying new memberships digitally. So we're feeling good.", "In terms of mix, GM and club pick, grocery, pantry, they're all strong, which we're feeling good about. We don't have a marketplace in Sam's yet. We're very focused on items and on curation of great items. And I think that's going to be really important for the Sam's business as we go forward.", "And the thing that I've finished with there is the great items drive organic traffic. So we'll continue to focus on those great items. And I think we'll get a lot -- we'll continue to get a lot of organic traffic there."], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ['You also asked about general merchandise, would you repeat that part of the question?'], 'session': 'question_answer'}, {'name': 'Paul Lejuez', 'speech': ['I was just curious how general merchandise performed online within the U.S. business. I think last time, you said there were several categories that were up double digits. Curious how some of those general merch categories perform.'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Yes, Paul, really, really positive strength in categories like hardlines. Our Auto Care center is running really well. And the events we talked about or I mentioned earlier, it's great to see momentum with strong toy items. Customers are responding to great gifts like the Barbie Malibu House, which is selling for $69, $89 before it went on rollback. So those types of items are working really well with customers.", "Also great to see -- after the redesign of the app, how the team is merchandising, general merchandise reflective of the seasons we're in. The site was really on point for Halloween before that for Labor Day. And you'll see the site flip quite frequently. So the team is doing a nice job reacting in categories to the plans that they have.", "But there are some categories there with strength. And as I said, there's still a long way between here and the holidays. We have a good plan or our people are ready. Our inventory is in position. So we're ready for our customers."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question comes from the line of Kate McShane with Goldman Sachs.'], 'session': 'question_answer'}, {'name': 'Katharine McShane', 'speech': ['We were wondering if you could go into any more detail as to what would explain a softening in late October. Do you think it could partially be due to student loans? Or is it more of a function of being a shoulder period or a lull before the holiday?', "And does the variability you're seeing week-to-week you noted increase the risk in being more promotional than maybe it was originally planned and expected in Q4?"], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Kate, this is John David. I'll take this. You're right to call out some of the economic factors that may be driving this. We're seeing credit tightening. We're in a period of time, 12 months after the Fed has begun raising rates. We've seen consumer balance sheets that are getting back close to prepandemic levels. We've got the repayment of student loans, which affects about 27 million Americans. So all of these be contributing.\r\nI do want to point out, John talked about the impact that weather can have on our business. I'm learning that, that can have profound effects on consumer shopping patterns. And we saw anomalous weather in the back half of October. So there's a number of different reasons. We can't put our finger on it exactly.", "And so that's why we take a little bit more of a cautious stance as we go into the fourth quarter calling out perhaps more variability because there are some trends that have been different than what we saw the first -- let's start -- or 11 weeks of the quarter. Not to be alarmed. I think our business is still performing really well. And that's why we called out what we've seen thus far in November, in particular, the events that we've had in Walmart U.S., some of the more festive events internationally. We've seen strong response from our customers. But this is -- this was -- the trend we saw in the back half of October was different than anything else we've seen this year, and so we simply want to call that out.", "In regards to promotion, maybe the segment CEOs want to comment on this, but I feel like we're in a good place from an inventory level, I don't necessarily see a more promotional holiday season than what we are currently planning."], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["This is John, Kate. I think what's encouraging is that our traffic, our transaction counts remained strong and consistent throughout the quarter. At the end of October, we did grow our Halloween business a little less than we expected. I'm sure there's something to do with weather and it being on a Tuesday, which is different than prior years.", "And then as we get in November, with the cold weather, we saw cold weather categories respond right away. Our event was strong. So John David said it right, we're just cautious of a shift that we did see. But overall, seeing the number of customers who shop continue to grow. We've seen new customers all year across a wide variety of income groups. We'll be ready for all those customers. We would be ready for anything that they need at the time.", "I really like the flexibility the team has built in. We delivered Halloween up until 6:00 p.m. on the date of the holiday, which is something we haven't been able to do before. So our express and same-day delivery service continues to grow, which is helping us right up until the point the customers need product."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Michael Lasser with UBS.'], 'session': 'question_answer'}, {'name': 'Michael Lasser', 'speech': ["Looking towards next year, how linear will the relationship be between Walmart's overall comp and the operating income growth? So if you only comp 2%, let's say, could you still grow operating income at the higher end of your range, call it, 7% to 8%? And how does the prospect of broad-based deflation impact that, especially as some of the naysayers say that Walmart's comp in recent quarters has just been driven by the impact of inflation?"], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Well, Michael, it's good to speak with you. One of the things that we're looking at closely in our business is units and we've seen good growth in units. So it has not been entirely driven by just higher prices. We think we're positioned well as we go into the end of this year and into next year.", "To answer your question, it would depend upon what's driving the 2% comp. And so it's hard to extrapolate trends from this year into that. The team here though is very focused on what could happen in a more deflationary environment, making sure that we're we have a cost structure that supports the revenue environment that we operate in.", "So when you think about the relationship between operating income and sales, on a multiyear basis, we actually feel like we're in a really strong position given what's happening in the business. From 1 quarter to the next, that may not always be the case as we manage through certain headwinds but we feel like we're positioned well for virtually any economic environment.", "And I'll remind you, like I know there's maybe trepidation or concern among consumer health. This is when we shine. This is when Walmart is at its best when we can deliver value for our members and customers. And so we look forward to being able to put up financial results in any economic environment."], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Michael, we want to make sure we're doing everything we can to keep prices as low as possible for our customers. I'm really pleased in the U.S. business that our rollback count is up significantly over last year. It was a lot of fun to be able to tell all of our customers that Thanksgiving at Walmart this year will be a lower price than what it was a year ago. We worked really hard the last 2 years to keep it flat and it's coming down. And that's great for customers.", "You had really -- inflation in categories like dry grocery. So I'm excited when I'm in stores, and I was in -- Texas the other day, the number of rollbacks that we have out on feature, in front of customers, right upfront in categories like dry grocery, a lot of our fresh categories have come in line, eggs and dairy have come back in line from a year ago, that's great for customers. And as John David said, that's the time that we win. We deliver value and our teams are ready to do that and any can do."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Rupesh Parikh with Oppenheimer.'], 'session': 'question_answer'}, {'name': 'Rupesh Parikh', 'speech': ['And I had a question just on the SG&A line. So at least in the Walmart U.S. business, it appears both wage inflation and remodels appeared to be a significant headwind on that line. So just curious if you expect those headwinds to continue into next year?'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Rupesh, it's John. The remodels, really, that was a big number of remodels we hit. I mentioned earlier, 197 remodels completed between late October and November 3. Of course, we'll continue our remodel program throughout next year. We have a good plan on the number of sites. We're excited about the results that we're seeing from those. We definitely hear and know that our results change for categories like apparel, home. So I think we have a good plan there.", "It was a higher number at the end of the quarter and the end of the month than what we had originally planned for. Some had slipped into later periods. So I think we'll have a good balance as we move forward.", "On wages, we're staffed ready for the holiday. For the most part, stores and distribution centers are completely staffed. There are some locations that will continue to hire. And we didn't go out this year with a large number of people that we intend to hire for the holiday. We're happy with our full-time, part-time ratio. And where we need hours the next few weeks, which is really next week for food leading into the event Wednesday, going into the Thanksgiving holiday and Black Friday, we'll be ready to manage the business with our existing associates."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Krisztina Katai with Deutsche Bank.'], 'session': 'question_answer'}, {'name': 'Krisztina Katai', 'speech': ["On general merchandise, the low to mid-single-digit deflation that you're seeing relative to the cost that you put up would imply maybe that the units have improved sequentially. So one, can you talk about what you are seeing in units, your current price gap this today? And how might you be thinking about price versus unit dynamic into next year?", 'And then two, I just wanted to see if -- would like to share their initial reflections on the new goals?'], 'session': 'question_answer'}, {'name': 'Unknown Executive', 'speech': ['So the first question on units in general merchandise. And as prices have come down, are we seeing -- units go up?'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["So let's talk about general merchandise first. Customers are responding to -- And I mentioned one earlier in the Barbie category, which is the Malibu Dream House. So we see that consistently across other items and toys. And Toys is top of mind because it's the Christmas, whether it's the Melissa and dog home set that's rolled by $10 to $25. We have the old classic Barbie that's $49 down from $59, really good unit movements.", "We're also happy to see, as I said earlier, the number of rollbacks that are across the entire store and the assortment, over 50% over last year. So customers are responding, but most importantly, our team is proud to offer great values and lower prices to customers. We've been in a pretty steep inflationary environment the last couple of years. So it's good to see some of these prices come back in line.", 'And as far as how we think about that going forward, we mentioned this earlier, the results in e-commerce are quite encouraging at plus 24% for the quarter and the breadth of the offer in eCommerce as it develops, I think, is quite encouraging with growth in the marketplace, continued acceleration of the online pickup delivery business and our first-party business.', "And as we get into the holiday season, the team has worked really hard on inventory positioning, the condition in stores, our NPS levels are at a really good spot and have continued to improve. And I think the result of that is we've had consistent traffic growth throughout the quarter, and we continue to see that, which is a good sign for what may be to come."], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ["It's going to be interesting to watch how the dynamic plays out between general merchandise and food. So if you've got food prices, if you double-click on that, dry grocery versus fresh, and think about where prices are compared to a year ago, in general, they're still up and the 2-year stack is high. But in some fresh categories, as we mentioned earlier, we are seeing prices come down.\r\nOn the GM side, as things have come down, it's come down kind of steep in the last few weeks, maybe relative to what we've seen before. And so I think it's to be seen. If the food prices come down in dry grocery and consumables and we start seeing deflation in those categories, that will free up dollars to be spent in general merchandise. And with the rollback positioning and some of the prices we're hitting, it makes sense that people would be able to shift back to GM as they shop the box or the app.", "The great thing about our position is we don't really care. Like they can buy whatever they want to buy. We're positioned for food. We're positioned with fresh. We're positioned with apparel and with hardlines and with holiday season with the categories like toys. So we've got a good value regardless of which category and department you look at and we'll play the shift as it happens. And if we end up where both sides, food and GM, are deflated from then we just need to focus on driving even more units to your point. But if they've got dollars to spend, they'll spend them. And we're there for them. And we can do it in store Club. We can do it with pickup, we can do it with delivery. So we feel good about our position, and we'll just manage it as the weeks and months play out and are as fascinated to watch it as you are. Kath, how's the job going?"], 'session': 'question_answer'}, {'name': 'Kathryn McLay', 'speech': ["Yes. Krisztina, thanks for the question. I would say, first of all, it's incredible that it's only been a quarter since they stepped into the role. It's -- and the team have honed a really exciting portfolio of businesses, and it's been great to be able to get out into the market over the last quarter being in Mexico, China and India. And just looking at the pace of transformation and the way the team rise to the challenge to be relevant in those local communities is extraordinary. And the ability to cross-learn between markets is such a great gift that we have in the international business.", "So I've been impressed by the strength of the teams that we have out there. And also just really impressed by how they're translating our purpose and mission to save people money so they can live better into being really relevant. So whether it's in Canada where they are able to actually be Thanksgiving meal at a price lower than last year, whether it was in Walmex -- or sorry, in Mexico, where there's held down price on a basket of essential items, no matter where it is, where you are in the international portfolio, our teams are working really hard to be relevant and help those communities celebrate the holiday and festivals that are rolling out over this -- over Q3 and into Q4. So excited to join the team."], 'session': 'question_answer'}, {'name': 'Christopher Nicholas', 'speech': ["Okay. Thanks, Kath. And Krisztina, thanks for the question. I think probably I'd just like to start with the derogate I have now running this business to thank the Sam's Club associates for such a brilliant quarter and for the hard work that they have done to deliver that set of results. The team I'm really proud of, and I'm grateful to part that club. And honestly, it's kind of a lot of fun to be here and Kath and tell me that, that would be the case.\r\nI'm really grateful for the strong foundation that the Sam's Club team has built. Brilliant talent, a deep bench of merchant talent and it's -- I mean, it really is a merchant-led business. We've got amazing member-led culture, fantastic clubs and associates, great items, strong brand in Members Mark and the beginnings of a world-class eCommerce business. All of that drives strong member value.", "So I see a really unique opportunity for Sam's to use this momentum as a jumping off point to accelerate. So driving growth through digital engagement, offering unique value through great items that consumers can't get anywhere else and a deep understanding of members in a way that will make us more relevant to them, both in club and digitally. So we can appeal to an even broader set of consumers. So yes, a lot to go for really exciting. So thanks for asking."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question comes from the line of Robby Ohmes with Bank of America.'], 'session': 'question_answer'}, {'name': 'Robert Ohmes', 'speech': ["Actually, it's a follow-up question on deflation. I was hoping Doug or anyone else could just talk about -- just to clarify what's driving the LIFO tailwinds. Is it all general merchandise right now? Or is there a grocery in there?", 'And Doug, you mentioned lowering grocery prices but you also mentioned, I think, stubborn inflation still out there in your opening comments. And so is there just maybe a little more color, like is dry grocery getting set to deflate? Is that what you guys are seeing? And then also where do wage pressures come in? Do you think wage pressures are also sort of disinflating now?'], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Robby, good to speak with you. It's John David. I'll start and address the LIFO part of the question and then maybe hand it over to Doug and others. On the improvements that we've made there, that is, as you know, dependent upon the cost of goods that we're buying. And we've seen the pricing level come down overall broadly. But I don't want to  miss the point to mention that our teams have actually done a really good job with suppliers to help affect that outcome.", "So this is not something that just happens to us. The team has worked to actually have this outcome. So it's far better than what we expected when we went into the beginning of the year, and we're actually pleased to see this outcome."], 'session': 'question_answer'}, {'name': 'Robert Ohmes', 'speech': ['And is that -- just to clarify, is that general merchant vendors? Or is that all vendors, including grocery vendors?'], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["It's across all categories. It probably skews a little bit more to consumables and GM."], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ['I think, Rob, this is Doug. Generally across markets, we have an inflationary environment. The U.S. and what we went through here the last few years is more dramatic than what I had seen in the U.S., but of course, had experience out of Brazil and Argentina and other places.', "China is not really inflated. That's an outlier as it relates to this conversation. But in the U.S. specifically, as I mentioned a few minutes ago, in the fresh categories, you see beef up, but dairy, eggs, chicken, seafood down. So commodities will do what commodities will do.", "General merchandise had been coming down and came down a little more aggressively in the last few weeks or months than the trend before that, which we think is a really good thing. But it does start to have an impact on dollars when units don't go up enough to offset the deflationary impact as it relates to GM.", "The dry grocery and consumables question feels like the key question. Will it come down? Will those categories come down? We hope they will. On a 2-year stack in Walmart U.S., John, I think we're still mid-double digits, slightly up versus a year ago. But we think we may see dry grocery and consumables start to deflate in the coming weeks and months.", "And so as we look ahead to next year, we could find ourselves in Walmart U.S. with a deflationary environment. And John David mentioned earlier that causes us to think about what are we doing with expenses? Are we ready for that? It's too early to call how dramatic it will be. And as we mentioned earlier, we are happy about it. We want our customers and members to have lower prices, and we'll manage mix and we'll manage through better than anyone, and it doesn't change anything about our plan.", "All the things that we've been doing to change to be able to serve people in new ways like with pickup and delivery, the expansion of the marketplace, all the things that flow from that, that help us with operating income, all those things are still true regardless of what the top line dollar growth rate looks like as a total enterprise.", "For a while now, we've been talking about 4 and greater than 4. If you look back at the last 3 years, hard pressed to remember 2019, seems like a long time ago, but 2019 grew faster than 2018 on a calendar year basis. So we had a trending growth rate moving in the right direction and then the pandemic hits and then inflation hits. So if you look back at the last 3 or 4 years, we've been growing faster than 4.", "If we find ourselves in a deflationary environment next year and we grow at 4 or a little less than or around 4, as long as we're growing share and improving what we're doing for customers and members on the top line, that will be what it will be. We'll get as much as we earn. But the operating income percentage will still go up because we've got this automation plan, and we've got the digital businesses reshaping the income statement, which will help returns.", "So the plan is the plan. We are executing. We're just trying to communicate with you today as we release our results, what we saw the last part of October in Walmart U.S., in particular, communicate what happened with expenses but fundamentally, what's happening here is exactly what was happening here 3 months ago, 6 months ago. We're executing our plan."], 'session': 'question_answer'}, {'name': 'Robert Ohmes', 'speech': ['And just anything on wage pressures, Doug?'], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ["Wage inflation is not as bad as it was before. We -- John mentioned earlier what happened in Walmart U.S. I'm not worried about wages. We've got an appropriate wage improvement for our associates planned for next year. I think we're in good shape. We're staffed. We've got a good plan. Not concerned about that aspect of it."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Scot Ciccarelli Truist Securities.'], 'session': 'question_answer'}, {'name': 'Scot Ciccarelli', 'speech': ['So another question actually on remodels. I know you had a lot over the last couple of months as you referred to. But given the strong returns on the remodels, does it make sense to continue to accelerate that process even if it holds earnings flow through a bit in the near term? And then related to that, if you do accelerate the process, where do you have to go on the -- line to where you start to see more benefit than incremental expense on a net basis?'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["I think the short answer is that it does make sense to accelerate and we have accelerated. So we will complete this year a couple hundred more than we did in the last few years. So the number of remodels has gone up. Our team has gotten much more, I'd say -- we've got their arms around the process, the new fixtures, the changes. So the remodels are happening a bit quicker and more smoothly than they were in years past.", "And also the supply chain is helping. We were going to remodels in '21 and '22, where we had a hard time getting fixtures and getting parts and getting the equipment in on time. So we're feeling better about the way these are all coming together.", "The performance of the remodels, we are -- we continue to be pleased with on the top line. We continue to be pleased with the NPS numbers we see, the customer reaction of the new assortment particularly as I mentioned earlier, apparel, pets, beauty, home, a number of categories is really great. And I mentioned when they completed just a couple of weeks ago in [ Uveal ], Texas and just such great -- is such a great investment in the community, it makes the store fill new, refreshed, the people are -- there's a different look in their eye and a smile, the associates are thrilled with the results, and they were really proud of it.", "And as we go in the holidays, I think that customers will really love to see in these communities all across the U.S. more access to different products than they had before. And one of the things that's important in all these remodel process is that the customer notices the difference, and they notice the difference, not only in a facility, but in the product and I think we're delivering both of those in the remodels. So we'll continue an aggressive plan for the remodel locations into next year."], 'session': 'question_answer'}, {'name': 'Scot Ciccarelli', 'speech': ['And so is there a headwind to profit flow through as that process continues at that pace?'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["No, it's in the plan. What happened in Q3 is a few that had been in process, slipped into late October and then 117 on 1 day was quite a big number. So what you'll see going forward is a more balance of remodels completing by quarter. Ideally, we would have liked to complete -- we wouldn't want to have those so close to the holiday. I think the teams have done a nice job finishing the remodels and then getting back right into merchandising for the holiday, so to be more even across quarters, but that's all built into our plan."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Edward Kelly with Wells Fargo.'], 'session': 'question_answer'}, {'name': 'Edward Kelly', 'speech': ["I have a question on the gross margin in the U.S. The margin was up [ 5 ] year-over-year. I think the expectation was that it maybe better than that. I was hoping if you could provide some of the puts and takes over that. I'm not sure if GLP-1 is maybe having a bigger impact there. So just thoughts on the gross margin this quarter and then maybe how we should think about that in Q4?", "And then a clarification around the legal charge. I think you said $70 million, $75 million, but then 40 basis points. So I'm not really sure. I'm a little bit confused about that."], 'session': 'question_answer'}, {'name': 'John Rainey', 'speech': ["Yes. The legal charge is 40 basis points with that number. And then as it relates to our guidance for the year, I'll point out that 7% to 7.5% operating income on our business is $125 million. That is really more -- it's kind of a precise number for the size of business that we are. And so that the magnitude of some of these things, like the hurricane, like the legal charges, push us through the lower end of that range for the year.", "On general merchandise, we did see some of the impact from business mix in the quarter. We benefited from that. The U.S. was up I think 5 bps, if I remember correctly. But as Doug noted, too, like we're certainly trying to be -- to lower prices for our customers and make sure that we're providing the value that they need. So there's a balance of all of that that's impacting those numbers."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our next question is from the line of Peter Benedict with Baird.'], 'session': 'question_answer'}, {'name': 'Peter Benedict', 'speech': ["Just GLP-1 just came up here in that last question. Just curious, we hear it's a thing. Maybe expand on maybe what you're seeing there, how it's impacting your business currently and what you see for that going forward?"], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Peter, thanks for the question. No, it's still early to -- and time will tell how this affects the customer -- business. As we said before, we're seeing some shifts in categories. But right now, we really don't have anything up to add above and beyond what we've said in the past."], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ['Our final question is from the line of Seth Sigman with Barclays.'], 'session': 'question_answer'}, {'name': 'Seth Sigman', 'speech': ['I wanted to follow up on the consumer. I know it was discussed quite a few times today, but you guys throughout the year, have discussed a number of different signals of sensitivity, buying more around paycheck cycles, seeking more value coming out for the promotional events. So just curious if you can provide a little bit more perspective on that and maybe more specifically what you are seeing in terms of market share across cohorts.'], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ['Yes. for Walmart U.S. specifically, John, as it relates to share?'], 'session': 'question_answer'}, {'name': 'John Furner', 'speech': ["Yes. Thanks for asking, Seth. We've been pleased to see share growth all year, and we've talked about that across the -- groups. And what's been encouraging as of late is a bit higher share growth in general merchandise categories. We saw that month by month throughout the third quarter."], 'session': 'question_answer'}, {'name': 'Doug McMillon', 'speech': ["I don't know that we have a lot more to add on the consumer than what we've already said. I think we covered it. We're well positioned, and I think our value proposition across category and the way we're serving people, which have some save time as well as save money causes us to feel good about our position for the quarter.", "We get a lot of questions about what's happening in the U.S. economy and other economies and what's happening to the consumer and we feel compelled sometimes to try and help claim what we're seeing. But to be clear, from our point of view, front-footed, offensive and feeling good about our opportunities. Stores and clubs look good. So that's the way we're thinking about the quarter.", "Yes. I'll just wrap up here. We've got a little over time. I'm as excited as I have been. We're executing our plan. We've got a good plan. Customers and members are choosing us. And I think they have been choosing us not only because of price leadership, which they can count on and will continue, but also because we're making it easier to shop with us.", "Our NPS scores in stores and clubs are encouraging. Our NPS scores, as they're improving across pickup and delivery, are encouraging. We just want to save people money on time and make this easy and help them have a great holiday season. And I think as it relates to the top line, we can continue to expect that we will outperform and do well. And as it relates to operating income growth, we'll grow it faster than sales over time because we've got this really good automation plan. The metrics that John David outlined when we started the call are really encouraging. We continue to feel very good about what that's going to mean for our business.", "And then as it relates to the business mix, having eCommerce grow so much across our segments is awesome and encouraging. And as a reminder, that's a combination of first and third party. And as we grow with our suppliers and also with our marketplace sellers, we get those opportunities to serve them with ads, to serve them through fulfillment services, to monetize our data in different ways. So the business model change will continue, which will enable that operating income growth to help us improve returns over time.", "So we're antsy about Christmas every year. This is my 33rd year, and I feel like it's a bit of a rerun in that it seems like we're always talking about customers being price conscious, and we always will be. And they're always looking for the hot toy and the right gift for Christmas. And they'll come by food for us for Thanksgiving and for the Christmas meal and then New Year's will come, and we'll have clearance prices after Christmas, and we'll have a strong January because customers will react to clearance, at least the first couple of weeks when that's happening and we'll update you on the fourth quarter and tell you how it went.", 'But we feel really good about our position and excited about executing this plan, and appreciate your ongoing support and interest in our company.'], 'session': 'question_answer'}, {'name': 'Operator', 'speech': ["Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation."], 'session': 'question_answer'}], 'year': 2024}
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    {
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      "name": "Operator",
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        "Greetings.",
        "Welcome to Walmart's fiscal year 2024 third quarter earnings call.",
        "At this time, all participants are in listen-only mode.",
        "A question and answer session will follow the formal presentation.",
        "If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad.",
        "Please note this conference is being recorded.",
        "At this time, I'll turn the conference over to Steph Wissink, Senior Vice President of Investor Relations.",
        "Steph, you may begin."
      ],
      "session": "management_presentation"
    },
    {
      "index": 1,
      "name": "Steph Wissink",
      "speaker_id": "steph_wissink_wmt",
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      "speech": [
        "Thank you and happy holidays everyone.",
        "Joining me today at our home office in Bentonville are Walmart CEO Doug McMillon and CFO John David Rainey.",
        "Doug will begin with his reflections on the quarter and year.",
        "John David will follow with his view of enterprise results and segment highlights using our financial framework of growth, margins and returns, before speaking to our updated guidance for the year.",
        "For specific segment level results, please see our earnings release and accompanying presentation on our website.",
        "Following prepared remarks, we'll take your questions.",
        "At that time, we will be joined by our segment CEOs: John Furner from Walmart US, Kath McLay from Walmart International, and Chris Nicholas from Sam's Club.",
        "In order to address as many questions as we can, please limit yourself to one question.",
        "Today's call is being recorded and management may make forward-looking statements.",
        "These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements.",
        "These risks and uncertainties include but are not limited to the factors identified in our filings with the SEC.",
        "Please review our press release and accompanying slide presentation for a cautionary statement regarding forward-looking statements, as well as our entire safe harbor statement and non-GAAP reconciliations on our website at stock.walmart.com.",
        "Thank you for your interest in Walmart.",
        "Doug, over to you."
      ],
      "session": "management_presentation"
    },
    {
      "index": 2,
      "name": "Doug McMillon",
      "speaker_id": "doug_mcmillon_wmt",
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      "speech": [
        "Good morning everyone and thanks for joining us to talk about our third quarter results and how we're seeing the rest of the year.",
        "Our value proposition continues to resonate with customers, helping us gain share and drive e-commerce growth.",
        "We're on track to grow adjusted operating income at a faster rate than sales for the year, consistent with what we discussed at our investor meeting earlier this year.",
        "We had strong revenue growth for the quarter across each of our segments.",
        "Comp sales for Walmart US were 4.9% and 3.8% for Sam's Club US.",
        "Sales for Walmart International were up 5.4% in constant currency, led by Walmex and China.",
        "Sam's Club continues to perform well both in Mexico and China, and while strength was broad-based for Walmex, our Bodega Aurrera business is worth calling out as it continues to deliver outstanding growth.",
        "E-commerce sales were up 24% in Walmart US, 16% in Sam's Club US, and 15% globally.",
        "Timing of our Flipkart Big Billion Days event, which moved from Q3 last year to Q4 this year, affected comparisons in our international segment, leading to a decline of 3%.",
        "So we'll see the benefit from the timing shift as we report next quarter.",
        "Across markets, the team did a nice job driving our seasonal events.",
        "Our in-stock and inventory levels are in good shape.",
        "We finished down 1.2% in inventory for the total company, including down 5% for Walmart US.",
        "Both our top line and adjusted EPS came in better than what we projected at the beginning of the quarter, but we could have done a better job on expenses, which is reflected in adjusted operating income growing less than we expected.",
        "We had a couple of unexpected expense increases in SG&A, and you'll hear more about those when John David walks through the numbers.",
        "In the US, pricing levels in many food categories continue to be a concern.",
        "Overall, our product costs are up versus last year, and they remain up even more on a two-year stack, which is putting pressure on our customers.",
        "Beef prices are high, but we're happy to see lower pricing in dairy, on eggs, and with chicken and seafood.",
        "The pockets of disinflation we are seeing are helping, but we'd like to see more, faster, especially in the dry grocery and consumables categories.",
        "The other good news is that general merchandise prices continue to come down.",
        "GM is down low to mid-single digits versus last year.",
        "That enables us to roll back pricing, which will help our customers during this holiday season when general merchandise is so important for gift giving.",
        "We still see pressure from mix, including outside the US, which we expected, but I like the market share gains we're seeing in this category.",
        "In the US, we may be managing through a period of deflation in the months to come.",
        "And while that would put more unit pressure on us, we welcome it because it's better for our customers.",
        "When I look at our P&L, it's continuing to change shape.",
        "Mentally, I break it down as a combination of a traditional retail P&L and a newer version that starts with our digital businesses.",
        "It flows from first and third-party e-commerce pickup and delivery to businesses like membership, advertising, and fulfillment as a service.",
        "It includes some faster growing, higher margin components that combined with the more traditional P&L gives us a business model that's more profitable in percentage terms as it grows.",
        "We saw strong growth in all these areas for the quarter.",
        "And when you put it together with the supply chain automation work we're doing, you get a more sustainable business that can grow more effectively over time and create a better mix along the way.",
        "Marketplace is one of our engines for these mutually reinforcing businesses, meaning that marketplace growth pulls other businesses like fulfillment through.",
        "Back in September, we held our first ever marketplace seller summit.",
        "We hosted thousands of current and potential sellers to let them see firsthand our commitment to this business and how we'll grow it together.",
        "Since the beginning of last year, we've more than doubled the number of items available to customers on our US marketplace.",
        "It's an important piece of what we're building, and it's growing fast, and not just in the US.",
        "We have a unique opportunity to grow in India, Mexico, Canada, and Chile.",
        "We love the opportunity to grow our assortment this way so customers can get what they want, when and how they want it.",
        "We're making shopping easier and more convenient.",
        "Our net promoter scores for pickup and delivery in Walmart US are improving, and we've started using generative AI to improve our search and chat experience.",
        "We've released an improved beta version of search to some of our customers who are using our app on iOS.",
        "In the coming weeks and months, we'll enhance this experience and roll it out to more customers.",
        "When I step back and look at the company overall, I love what we're building and how we're building it.",
        "We've got a good hand to play and a strong team making things happen.",
        "It's our recipe for growth and improved margin and returns we've been discussing with you.",
        "Everyday low prices are a foundational component of us fulfilling our purpose.",
        "We bring EDLP to life on a year-round basis by doing things like offering a Thanksgiving meal in the US and Canada that costs less than last year, or offering tremendous value for things like fashion, electronics, and seasonal decorations, and helping remind people that when they're looking to buy toys, we're the place to come because we have the right product at the right price.",
        "This same focus on purpose and execution came through when I was visiting Chile, Canada, and China earlier this quarter.",
        "It was my first time back in China since before the pandemic.",
        "Our team there runs some of the most incredible Sam's Clubs in the world, and they continue to be a leader for us in terms of digital penetration and innovation.",
        "As I wrap up, I know we're all concerned about events across the world.",
        "War, acts of terror, political unrest, impacts from storms like those in Mexico from Hurricane Otis, the pressure we're feeling from stubborn inflation in some categories, and other challenges beyond our control.",
        "As for our company, we care about everyone.",
        "We want to be a place where literally everyone feels comfortable and welcomed to shop or work.",
        "We want to live our values and create a warm, safe, and fun place for the hundreds of millions of people that will shop with us in the days and weeks ahead.",
        "I'm grateful to be part of this big team, grateful to work alongside our associates.",
        "Now, I'll turn it over to John David."
      ],
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    {
      "index": 3,
      "name": "John David Rainey",
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      "speech": [
        "I'd like to start by thanking our customers, members, associates, and partners for helping us deliver a good quarter.",
        "We're pleased overall with how the team executed and how our strong value proposition and omnichannel strategy continue to resonate with customers.",
        "We're gaining share, seeing strong e-commerce growth, and excited about the contributions from higher margin businesses like advertising.",
        "Sales grew more than 4%.",
        "Gross profit was better than expected, and we exceeded our guidance for EPS.",
        "These results reinforce the benefits of our highly diversified business with broad-based contributions across segments and markets, channels and formats, and strategic growth areas.",
        "While we're pleased with our top-line results, operating income was below our guidance due to higher than anticipated expenses, largely certain legal accruals.",
        "I'll provide more details on guidance shortly, but the key takeaway is that we're raising our full-year sales and EPS guide while reiterating our prior operating income guidance.",
        "We expect the relationship between profit and sales growth to favor profitability in Q4 and for the full year to align with our goal of operating income growing faster than sales.",
        "Now, let me review the key financial highlights for Q3 using our financial framework of growth, margins, and returns.",
        "First, growth.",
        "Constant currency sales increased 4.4% or nearly $7 billion.",
        "Importantly, we saw traffic growth across both in-store and digital channels.",
        "All three operating segments experienced mid-single-digit sales growth, with comp sales for Walmart US up 4.9% and Sam's Club US up 3.8% excluding fuel.",
        "International grew sales 5.4% in constant currency, with Walmex sales up more than 9% and China up 25% with strong performance in Sam's Club and e-commerce.",
        "The timing of Flipkart's Big Billion Days pressured international sales growth as the event moved from Q3 last year to Q4 this year.",
        "So we expect the timing to be a benefit to Q4's growth rate for the segment.",
        "PhonePe also continued its strong momentum with annualized TPV or total payment volume reaching $1.2 trillion on nearly 5.8 billion monthly transactions.",
        "And PhonePe recently achieved an impressive milestone, eclipsing 500 million registered users.",
        "We continue to grow share in key categories, particularly in Walmart US grocery, where we delivered positive comps and saw strong share gains in both units and dollars.",
        "Grocery inflation moderated nearly 300 basis points from Q2 levels to a mid-single-digit increase versus last year, but on a two-year stack, it was still elevated at a high teens percentage.",
        "We see our customers showing ongoing discretion and seeking value to manage within their household budget.",
        "While general merchandise sales were down low single digits year-over-year in Q3, the rate of change was stable to Q2 levels, and we gained share across categories.",
        "As we enter the holiday season, we're working hard to lower grocery prices to ease the pressure for customers, giving them more capacity for general merchandise spend.",
        "Our business is rooted in a timeless purpose: to save customers money so they can live better.",
        "Against any economic backdrop, we're there for customers how and where they need us, and we're making shopping with Walmart and Sam's Club more convenient.",
        "Omni services, including pickup and store-fulfilled delivery, continue to drive strong growth, leading to a 24% increase in Walmart US e-commerce sales and 16% growth at Sam's Club.",
        "Multi-channel shoppers are more valuable, engaging more often and spending more with us.",
        "Pickup and delivery for Walmart US has been a key source of growth and share gains among upper-income households and has become the most productive channel for acquiring Walmart Plus members.",
        "In international, Walmex's expansion of omni offerings led to 1.5 million Bodega store-fulfilled digital orders in Q3.",
        "In Canada, we continue to roll out our unlimited next-day store delivery subscription called Delivery Pass, which is now available from two-thirds of our Canada stores.",
        "And I was in China recently, where our business is nearly a 50/50 split of physical and digital.",
        "I was impressed with how we're serving omni customers with speed and accuracy through new engagement and delivery models.",
        "Turning to margins.",
        "Gross margins expanded 32 basis points, reflecting the timing shift of Big Billion Days in India and lapping last year's LIFO charge at Sam's Club US.",
        "Walmart US gross margins increased 5 basis points, reflecting lower markdowns and supply chain costs, but we're still seeing ongoing category mix pressure as health and wellness and grocery sales outperformed general merchandise.",
        "Continued disinflation, along with the success of our merchants at Sam's Club in bringing down the cost of inventory, resulted in us not taking the expected $50 million LIFO charge in Q3.",
        "We no longer expect any further LIFO charges in Sam's Club this year.",
        "As we've said previously, over the next several years, we expect margins to move higher as we modernize our supply chain and scale higher-margin growth initiatives.",
        "We've made good progress on both during the quarter.",
        "We continue to deploy capital to build technologies and optimize our next-generation supply chain, with automation and productivity benefits starting to appear in our results.",
        "We now operate nine regional distribution centers servicing US stores with varying levels of automation, with six more centers in active stages of construction.",
        "Currently, more than 15% of stores receive merchandise from these facilities, helping to get product to shelves faster and more efficiently.",
        "During the quarter, we opened our third next-generation e-commerce fulfillment center.",
        "These 1.5 million square feet facilities are expected to more than double the storage capacity, enable 2x the number of customer orders fulfilled daily, and will expand next and two-day shipping to nearly 90% of the US, including marketplace items shipped by Walmart Fulfillment Services.",
        "They also unlock new opportunities for our associates to transition into higher-skilled, tech-focused positions.",
        "To support the store-fulfilled digital business, we're on track to have seven stores with automated market fulfillment centers or MFCs operational by the end of this month.",
        "These MFCs stock thousands of the most sought-after items and are expected to increase order capacity and productivity while also increasing inventory accuracy, which helps us deliver perfect orders for customers.",
        "As we focus on improving e-commerce margins, we're making good progress in lowering digital fulfillment costs and densifying the last mile by tapping our broad store and club network.",
        "Over the past year, Walmart US has increased the percentage of digital orders fulfilled by stores by 800 basis points, and Sam's Club fulfills nearly 60% of online orders from its clubs.",
        "With the growth of our Spark driver platform, we've lowered store-to-home delivery costs by 15%, even as we've shortened delivery times to same day for more than 80% of our stores and in some cases as quick as 30 minutes.",
        "As we scale Walmart GoLocal, we're densifying the last mile, and we're approaching a milestone of 12 million deliveries for other retailers with this service.",
        "I'd like to touch on our portfolio of higher growth initiatives.",
        "These businesses reinforce our core omni retail model and are key to driving operating income growth ahead of sales over time.",
        "In Q3, this portfolio positively contributed to gross margins.",
        "Global advertising grew approximately 20% in Q3, with Sam's MAP growing over 27% and Walmart Connect up 26%.",
        "As an illustration of the omnichannel benefits of our ad platforms, more than 75% of Sam's MAP active advertisers are investing in search and sponsored ads, as in-club sales attribution has improved returns of digital ad spend by over 30%.",
        "International's ad revenue growth was impacted by the timing of Big Billion Days, but we're on track to deliver strong growth of approximately 45% for the full year.",
        "Moving to marketplace and fulfillment services, customer engagement continues to validate our strategies to invest in ways to grow this business on a global basis.",
        "As Doug mentioned, we held the inaugural marketplace seller summit to help accelerate our marketplace growth.",
        "For cross-border sellers in the US, we're expanding access to more customers beyond the US, Canada, and Mexico by opening our e-commerce marketplace in Chile to cross-border products next year.",
        "Over the past year, we've increased marketplace sellers by more than 20%, and the number of sellers utilizing Walmart Fulfillment Services is up over 55%.",
        "Next, membership remains a compelling way we deepen engagement with our customers.",
        "Sam's Club membership income grew over 7%, reflecting record member counts and plus member penetration.",
        "During Q3, we held events that were focused on member acquisition and digital engagement.",
        "We'll take a similar approach again during Q4, offering discounted access to Walmart Plus memberships while providing members early access to the best savings event throughout the holiday season.",
        "Turning back to the middle of the P&L, SG&A expenses deleveraged 37 basis points on an adjusted basis, impacted by higher year-over-year wage-related costs in Walmart US, including higher variable pay expenses relative to last year when we were below our planned performance.",
        "Store remodel costs were also higher as we rolled out 117 of our flagship design stores earlier this month, and legal expenses increased.",
        "Lastly, the timing shift of Big Billion Days pressured international expense leverage in Q3.",
        "We'll see the benefit come through in Q4.",
        "Third quarter adjusted operating income grew 3%, including 270 basis points of currency tailwind, while adjusted EPS of $1.53 increased 2% and compared favorably to guidance of $1.45 to $1.50.",
        "Relative to our guidance, Q3 EPS benefited by 1 cent from releasing the LIFO reserve we had earmarked for Sam's Club.",
        "Moving to returns.",
        "Over the last 12 months, sales have grown more than 6%, and operating income increased about 22%.",
        "And when combined with a disciplined capital approach, return on investment improved 130 basis points to 14.1%.",
        "The primary driver was lapping last year's Q3 charge related to the opioid legal settlement framework.",
        "ROI also reflects some benefits from productivity initiatives that we initially expected to realize in FY25.",
        "We continue to expect our ROI to increase over the coming years.",
        "In addition to our strategy, our financial position is an advantage and enables us to compete in an increasingly dynamic retail environment.",
        "Turning to guidance.",
        "We're confident in our agility and our ability to execute, and we're focusing our investment in areas where we can widen our omni advantage, deepen engagement, and drive sustained growth in new revenue streams.",
        "We like our position relative to competitors as we've maintained strong price gaps and increased share while preserving flexibility to respond to competitive dynamics.",
        "But we're not immune from the vagaries of the economy.",
        "We see our customers showing ongoing discretion and making trade-offs to be able to afford the things they want, given the sustained high cost of the things they need.",
        "Recently, we've experienced a higher degree of variability in weekly performance in between holiday events in the US, including seeing a softening in the back half of October that was off-trend to the rest of the quarter.",
        "Sales during November have turned higher as unseasonal weather abated and we kicked off holiday events.",
        "So sales have been somewhat uneven, and this gives us reason to think slightly more cautiously about the consumer versus 90 days ago.",
        "We still expect sales growth to moderate in Q4 versus prior quarters as grocery inflation further normalizes towards historic levels, but we're encouraged by the increased traffic and share gains we've seen and expect them to continue.",
        "As such, we're modestly raising our full-year sales guidance to 5 to 5.5% from 4 to 4.5% previously, primarily to reflect Q3's outperformance.",
        "For operating income, we're maintaining the guidance range of 7 to 7.5% growth.",
        "In addition to the 40 basis points of unexpected legal expenses in Q3, we also expect to record charges in Q4 totaling approximately 20 to 30 basis points related to unplanned store closures and recovery costs associated with the recent hurricane near Acapulco, Mexico.",
        "This impacted 28 of our stores, and less than half of them have been reopened at this time.",
        "Partially offsetting these costs is the approximate 40 basis point benefit from lower-than-expected LIFO charges compared to our prior guide.",
        "The net effect is a 20 to 30 basis point headwind to our prior guide, and as such, we currently expect to be in the lower end of the operating income growth range for the year.",
        "We expect merchandise mix pressure to continue in Q4 with grocery and health and wellness sales rates outpacing general merchandise and potentially be a bit more pronounced given the uncertain consumer environment.",
        "Based on Q3 results and less of an increase in interest costs for the year than we previously expected, we're raising our full-year EPS guidance range to $6.40 to $6.48.",
        "In closing, let me reiterate what I said previously.",
        "Aligned with our financial framework, we expect the relationship between profit and sales growth to favor profitability in Q3 and for the full-year operating income to grow faster than sales.",
        "We like our competitive position.",
        "Our financial results clearly demonstrate that our omnichannel strategy is winning.",
        "We're growing our share across categories, deepening customer engagement across channels, while investing in areas to widen our competitive advantage.",
        "The holidays are here, and our value proposition resonates with customers looking to save money as they celebrate.",
        "Operator, we'd now like to open the line for questions."
      ],
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      "speech": [
        "Thank you.",
        "At this time, we'll be conducting a question and answer session.",
        "If you'd like to ask a question at this time, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue.",
        "You may press star two if you would like to remove your question from the queue.",
        "For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.",
        "Also, that we may address questions from as many participants as possible, we ask that you please limit yourself to one question.",
        "Thank you."
      ],
      "session": "question_and_answer"
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    {
      "index": 5,
      "name": "Operator",
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      "speech": [
        "And our first question today comes from the line of Simeon Gutman with Morgan Stanley.",
        "Please proceed with your question."
      ],
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    {
      "index": 6,
      "name": "Simeon Gutman",
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      "speech": [
        "Hi, good morning everyone.",
        "I have one question, I'll make it maybe two parts.",
        "Um, the the first part, the legal expense, it so so that we can judge, you know, whether or not we should keep it in.",
        "It sounds like you're keeping it in.",
        "I'm not sure you're able to share what the nature of it is, but it seems like it was unexpected.",
        "So if there's any more color on it.",
        "And then the second real question is alternative revenue and profit, you know, was it hidden in any way this quarter?",
        "Do we get an inflection into next year?",
        "That seems to be the big investment question.",
        "Um, and are we going to see it ramp up and does it does it happen in a certain period or it just continues to build?"
      ],
      "session": "question_and_answer"
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      "index": 7,
      "name": "John David Rainey",
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      "speech": [
        "Thank you.",
        "Uh Simeon, I'll start and then others may want to jump in.",
        "On the the legal expenses, most were related or largely related to prior periods and that was not anticipated within the quarter.",
        "It's around $70 to $75 million, so we would not expect that to recur into the fourth quarter.",
        "On the alternative revenue, perhaps I'll start and let let others jump in."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 8,
      "name": "John David Rainey",
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      "speech": [
        "Our plan uh is that we shared at investor day is somewhat dependent upon the level of investment that we're having and seeing improving unit economics, but it's also growing these these parts of our business that are much higher margin.",
        "We talked about the growth in advertising across all segments, um quite frankly, and international while it was slower in this quarter, um we'll see strong growth for the year.",
        "All of these as they become a larger part of our overall business mix are going to have an outsized contribution to our our margin performance.",
        "So if you if you go back and you think about what we shared at investor day saying that we expect over the next several years to grow sales 4% and operating income greater than 4%, we would expect with each passing year, we're going to see a greater contribution from these higher higher margin profit streams, which help us to improve our margin each year."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 9,
      "name": "Doug McMillon",
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      "speech": [
        "Simeon, this is Doug.",
        "I would just add that I think you should have it in the continue to build category rather than an inflection."
      ],
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    },
    {
      "index": 10,
      "name": "Operator",
      "speaker_id": "operator_1",
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      "speech": [
        "Thank you.",
        "Our next question is from the line of Kelly Bania with BMO Capital Markets.",
        "Please proceed with your question."
      ],
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    },
    {
      "index": 11,
      "name": "Kelly Bania",
      "speaker_id": "kelly_bania_bmocapitalmarkets",
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      "speech": [
        "Good morning, uh thanks for taking our questions.",
        "Um, just another follow-up I guess on on the legal expense.",
        "I'm assuming that impacted the the US EBIT number, um but maybe you can clarify that.",
        "Um, and just anything in particular that impacted the US EBIT beyond um maybe some unexpected expenses, did that come in relatively in line with your expectations?",
        "And and I guess that's sort of my first question and then longer term, as you think about this plan to grow EBIT faster than sales in coming years, anything you're seeing with the consumer and it sounds like it's still choppy, that maybe leads you to reconsider how much you you might flow through to the bottom bottom line."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 12,
      "name": "John David Rainey",
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      "speech": [
        "Sure, I'll start and then John's probably going to want to jump in.",
        "Uh yes, the legal expenses hit the US segment.",
        "Um, there were some other items in there like I'll point out that we spent a little bit more on remodels.",
        "We did an all-time high level of remodels in the quarter, um but this is an this is investing in our business, which we definitely want to lean into.",
        "We're excited about the returns we're seeing around that.",
        "We're excited about the returns we're seeing on e-commerce.",
        "And so there were some investments related to that, but the vast majority of the delta between our guidance and actual performance was related to uh the legal accrual.",
        "In terms of our our long-term plan and and as it pertains to like possible changes in the in the consumer, uh I think our value proposition proposition resonates more than ever when the consumer is pressured.",
        "And we've seen this year that they not only are coming to us for the value that we provide, but also for the convenience.",
        "And these are areas that we're investing in.",
        "So we have a ton of conviction in the strategy that we have in in place and and our ability to execute on that.",
        "We should separate that from calling out some maybe um potential uh weakness or wobbling among the consumer that we saw in the in the back half of October, but we're we're very excited about the plan we have in place."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 13,
      "name": "John Furner",
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      "speech": [
        "Hey Kelly, it's it's John, good morning.",
        "Um, you know, first, I'm also excited about the top line results at 49 and then e-commerce at 24.",
        "The team has made a lot of improvements and they they should get the credit for that.",
        "You heard a couple things there, uh one about remodels as as John David mentioned, we had 117 remodels complete all on November 3rd.",
        "We think that's the largest number of remodels we've ever had complete in a single day.",
        "And then if you if you add together late October and November, it was 197 remodels.",
        "And those remodels have improved apparel, improved home, they have wider aisles.",
        "We're really happy with the way the the signing layout and they also have more investment for our online pickup and delivery business, which is a key catalyst for e-commerce growth and help us with being flexible for customers in any type of situation they want to shop in.",
        "So there are some costs associated with that in the quarter, but we feel great about those being investments for the long term."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 14,
      "name": "Doug McMillon",
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      "end_time_ms": 400670.0,
      "speech": [
        "Hey Kelly, this is Doug.",
        "Um, related to the last part of what you asked about, I don't think there's anything that causes us to think operating income won't grow faster than sales.",
        "Um, we've had really strong sales performance now for a few years.",
        "Obviously, we're impacted by what happens in our environment, but we expect to grow share, we expect to have a healthy top line.",
        "And as it relates to operating income, we've got a really good multi-year plan with two primary dimensions.",
        "One's the automation investments that um drives productivity improvements, and the other dimension is related to how the digital businesses change the shape of the income statement.",
        "Both of those things will be true, and it's a multi-year plan that shows progress along the way.",
        "So you guys from quarter to quarter, year to year, will see us make progress.",
        "You know, not every quarter may be up into the right in every category, but if you look at what happens from a trend point of view, those are the things we expect to deliver.",
        "And because operating income is growing faster than sales, we we our plan requires that we grow return on investment at at a higher rate over time.",
        "That's the plan."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 15,
      "name": "Kelly Bania",
      "speaker_id": "kelly_bania_bmocapitalmarkets",
      "start_time_ms": 401450.0,
      "end_time_ms": 402000.0,
      "speech": [
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 16,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 404590.0,
      "end_time_ms": 408650.0,
      "speech": [
        "Our next question is from the line of Paul Lejuez with Citi.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 17,
      "name": "Paul Lejuez",
      "speaker_id": "paul_lejuez_citi",
      "start_time_ms": 409820.0,
      "end_time_ms": 421400.0,
      "speech": [
        "Hey, thanks guys.",
        "Um, you have a really big e-com business that continues to grow at a rapid pace.",
        "Curious if you could talk about what's driving that growth from a traffic versus ticket perspective and how the growth in the marketplace uh sellers that you've seen are contributing to that growth.",
        "Also curious if you could talk a little bit about general merchandise performance online.",
        "I think you threw out some numbers last quarter about certain uh categories on the general merchandise side.",
        "Would love to hear how they performed uh online this quarter.",
        "Thanks."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 18,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 422650.0,
      "end_time_ms": 442230.0,
      "speech": [
        "Good morning, Paul, it's John.",
        "I'll I'll start with Walmart US and then pass it over to Kath and and Chris to talk about the other segments.",
        "I think as as you you step back and look at the growth, um one, we're we're pleased with our online pickup delivery business from stores.",
        "We have strengthened food.",
        "The team has continued over the last few years to expand our capacity and and more importantly, they've made improvements on key metrics like the one we call perfect order, which is getting customers what they want when they want.",
        "And I think that's a reflection of better in stock and and food overall, and that's helped us with our share gains in the food category.",
        "Um with marketplace, uh really pleased with the progress the team has made with with Tom Ward and Manish having the first summit as we mentioned earlier in the quarter.",
        "We've seen more sellers uh come online, our assortment has grown significantly.",
        "And just this week I was in one of the new fulfillment centers that John David mentioned in Lancaster, Texas, which is a great facility managed by a a very qualified team.",
        "And it's of course reassuring to see the amount of marketplace inventory that's coming in and seeing the number of marketplace sellers which we're grateful for those sellers who trust us to do their fulfillment.",
        "And and that's been that's been promising."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 19,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 442230.0,
      "end_time_ms": 450910.0,
      "speech": [
        "Uh the month of November, we had our first uh event uh last week and and getting into our holiday season.",
        "We have a long way to go from here until the end of the holidays, but really pleased with the results in marketplace, which is of course reflective of results in home and apparel and and gifting and other categories uh that are in line with the question you asked about general merchandise.",
        "So these are important businesses because they they help customers shop the way they shop when the the way they want to shop when they want to shop.",
        "And marketplace over time, of course, will be a key driver to some of the other businesses like advertising as as more sellers find customers on the Walmart marketplace, they'll want to use services like our fulfillment services and our advertising business.",
        "So I'll turn it over to Kath to talk about international."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 20,
      "name": "Kath McLay",
      "speaker_id": "kath_mclay_wmt",
      "start_time_ms": 450910.0,
      "end_time_ms": 481670.0,
      "speech": [
        "Yeah, thank you for that question.",
        "I think if you look at our e-com result, it's minus three, and that I don't think is a really, it's distorted by BBD.",
        "If you actually look at the underlying growth across the businesses, Walmex grew by 16% from an e-com perspective.",
        "Canada grew by e-com by 16%.",
        "A part of that was rolling out delivery pass to the number to a significant number of stores.",
        "Um, if you uh look at China, their business grew, the e-com business grew by 38%.",
        "So I think all of the teams are really focused on really getting the disciplines right of a perfect order and making sure that the experience for the customer is delightful.",
        "Um, I think, you know, we continue to learn from each of the different businesses.",
        "The Flipkart team were here with us yesterday and, you know, it's fascinating to see what they're learning through using Gen AI in the um uh in through big through Big Billion Days.",
        "Um there's just some really clever capability that make it very seamless and easy to be able to shop online.",
        "And then if you look at it from a marketplace perspective, we launched in Mexico, Canada, Chile, and South Africa marketplace during the last 12 months.",
        "Um obviously Flipkart is our largest and most and more mature marketplace business, but we're seeing accelerated marketplace growth um also through our cross-border trade.",
        "We opened that through Mexico and Canada to US cross-border sellers.",
        "And lastly, we launched uh Walmart Fulfillment Services in Mexico, Canada, and South Africa in the past 12 months.",
        "So we've seen good results, but we're really positive about the growth potential of both marketplace and um Walmart Fulfillment Services."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 21,
      "name": "Chris Nicholas",
      "speaker_id": "chris_nicholas_wmt",
      "start_time_ms": 481670.0,
      "end_time_ms": 518670.0,
      "speech": [
        "Yeah Kath, that was it's exciting time, Paul, thanks for the question.",
        "I think what's really interesting for all of us, but definitely for Sam's is that members want this and so we're giving them what they want.",
        "And we're at 13% of sales, 16% growth in the quarter, but we think it's a really huge opportunity.",
        "And as I think about e-commerce for and omni-channel sales for Sam's, I think about a a digitally connected member.",
        "So Scan & Go teaches our members that we're a digitally relevant business and they look to shop online and on on the um whether on the on the web or on the on the app, and we feel really good about that.",
        "And we've got all-time highs uh in that space.",
        "The other thing that's really interesting is as we look at the new members, we've got an all-time high number of membership uh in Sam's, and a lot of those people that are coming in now are digitally engaged members.",
        "They're coming in and they're buying new memberships digitally.",
        "So we're feeling good.",
        "In terms of mix, GM and uh so grocery pantry, they're all strong, which we're feeling good about.",
        "We don't have a marketplace in Sam's yet.",
        "We're very focused on items and on curation of great items, and I think that's going to be really important for the Sam's business as we as we go forward.",
        "And you know, the thing that I'd finish with there is that great items drive organic traffic.",
        "So we'll continue to focus on those great items and uh and I think we'll get a lot, we'll continue to get a lot of organic traffic there."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 22,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 519640.0,
      "end_time_ms": 523760.0,
      "speech": [
        "Paul, you also also asked about general merchandise.",
        "Would you repeat that part of the question?"
      ],
      "session": "question_and_answer"
    },
    {
      "index": 23,
      "name": "Paul Lejuez",
      "speaker_id": "paul_lejuez_citi",
      "start_time_ms": 524600.0,
      "end_time_ms": 534980.0,
      "speech": [
        "I was just curious how general merchandise performed online within the the US business.",
        "I think last time you said there were several categories that were up double digits.",
        "Curious how uh how some of those general merch categories performed."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 24,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 535600.0,
      "end_time_ms": 558440.0,
      "speech": [
        "Yeah, Paul, um really really positive strength in categories like hardlines, um our our auto care center uh is running really well um and and the events that we talked about or I mentioned earlier.",
        "Um it's great to see momentum with strong toy items, um customers are responding to great gifts like the the Barbie Malibu house which is selling for $69, it was $89 uh before it went on a rollback.",
        "So those those types of items are working really well for customers.",
        "Also, uh great to see um the the after the redesign of of the app, how the team is merchandising general merchandise reflective of the seasons we're in.",
        "Uh the the site was was really on on point for for Halloween before that for Labor Day, and you'll see the site flip quite frequently.",
        "So the team's doing a nice job reacting in categories uh to the plans that they have.",
        "Uh but there's some some categories there with strength and you know, as I said, there's still a a long way between here and the holidays.",
        "Um we have a good plan, our our people are ready, our inventory is in in position, so we're ready for our customers."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 25,
      "name": "Paul Lejuez",
      "speaker_id": "paul_lejuez_citi",
      "start_time_ms": 560380.0,
      "end_time_ms": 561350.0,
      "speech": [
        "Thank you, good luck."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 26,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 563910.0,
      "end_time_ms": 567960.0,
      "speech": [
        "Our next question is from the line of Kate McShane with Goldman Sachs.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 27,
      "name": "Kate McShane",
      "speaker_id": "kate_mcshane_goldmansachs",
      "start_time_ms": 569790.0,
      "end_time_ms": 594960.0,
      "speech": [
        "Hi, thank you, good morning.",
        "We were wondering if you could um go into any more detail as to what would explain a softening in late October.",
        "Do you think it could partially be due to student loans or is it more of a function of being a shoulder period or a lull before the holiday?",
        "And does the variability you're seeing week to week that you noted increase the risk in being more promotional than maybe was originally planned and expected in Q4?"
      ],
      "session": "question_and_answer"
    },
    {
      "index": 28,
      "name": "John David Rainey",
      "speaker_id": "john_david_rainey_wmt",
      "start_time_ms": 596330.0,
      "end_time_ms": 627070.0,
      "speech": [
        "Kate, this is John David.",
        "I'll take this.",
        "Um, you you're you're right to call out some of the economic factors that may be driving this.",
        "We're we're seeing uh credit tightening.",
        "We're uh in a period of time 12 months after the the Fed has begun uh raising rates.",
        "We've seen consumer balance sheets that are getting back close to pre-pandemic levels.",
        "You've got the repayment of student loans which affects about 27 million Americans.",
        "So all of these things could be contributing.",
        "I I do want to point out, John talked about the impact that weather can have on our business, and learning that that can have profound effects on consumer shopping patterns.",
        "And we saw anomalous weather uh in the back half of October.",
        "So there's a there's a number of different reasons.",
        "We can't put our finger on it exactly, and so that's why we take a little bit more of a cautious stance as we go into the fourth quarter, calling out perhaps more variability because there are some trends that have been different than what we saw the the first um first the 11 weeks of the quarter.",
        "Not to be alarmist.",
        "I I think our business is still performing really well, and that's why we called out what we what we've seen thus far in November, and particularly the events that we've had in Walmart US, some of the um uh more festive events internationally, we've seen strong response from our customers.",
        "But uh this is this was the trend we saw in the back half of October was different than anything else we've seen this year, and so we we simply want to call that out.",
        "In in regards to promotion, maybe the segment CEOs want to want to uh comment on this, but I feel like we're in a good place from uh overall and inventory level.",
        "I I don't necessarily see a more promotional holiday season than uh than than what we were currently planning."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 29,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 627070.0,
      "end_time_ms": 645690.0,
      "speech": [
        "Kate, this is John, good morning.",
        "Uh I think what's encouraging is that our our traffic, our transaction counts remained strong and consistent throughout the quarter.",
        "Um the end of October, we did grow our Halloween business, a little less than we expected.",
        "I'm sure there's something to do with with weather and and it being on a Tuesday, uh which is different than prior years.",
        "And then uh as we got into November with the cold weather, uh we saw cold weather categories respond right away, our event was strong.",
        "So John David said it right, we're we're um we're just uh cautious of of a shift the shift that we did see, but overall, um seeing the number of customers who shop continue to grow.",
        "We've seen new customers all year across a wide variety of income groups.",
        "Um we'll be ready for for all of those customers and we'll be ready for uh any anything that they need at the time.",
        "I really like the flexibility the team has built in.",
        "We delivered Halloween up until 6:00 p.m. on the date of the of the holiday, which is something we haven't been able to do before.",
        "So our Express and uh same day delivery service continues to grow, which is helping us right up until the point customers need product."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 30,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 648010.0,
      "end_time_ms": 652000.0,
      "speech": [
        "Our next question is from the line of Michael Lasser with UBS.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 31,
      "name": "Michael Lasser",
      "speaker_id": "michael_lasser_ubs",
      "start_time_ms": 656510.0,
      "end_time_ms": 677640.0,
      "speech": [
        "Good morning, thank you so much for taking my question.",
        "Looking towards next year, how linear will the relationship be between Walmart's overall comp and the operating income growth?",
        "So if you only comp 2% let's say, could you still grow operating income at the higher end of your range, call it 7 to 8%?",
        "And how does the prospect of broad-based deflation impact that, especially as some of the naysayers say that Walmart's comp in recent quarter quarters has just been driven by the impact of inflation.",
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 32,
      "name": "John David Rainey",
      "speaker_id": "john_david_rainey_wmt",
      "start_time_ms": 679410.0,
      "end_time_ms": 707780.0,
      "speech": [
        "Well Michael, it's good to speak with you.",
        "Um, one of the things that we're looking at closely in our business is units, and we've seen good growth in units.",
        "So, um it has not been entirely driven by just higher prices.",
        "We think we're positioned well uh as we go into the the end of this year and into next year.",
        "To answer your question, it would depend upon what's driving the the the 2% comp.",
        "So it's it's hard to extrapolate uh trends from this year into that.",
        "The team here though is very focused on what could happen in a more deflationary environment and making sure that we're we have a cost structure that supports the revenue environment that we operate in.",
        "So when you think about the relationship between operating income and sales on a multi-year basis, we we actually feel like we're in a really strong position given what's happening in the business.",
        "Um from one quarter to the next, that that may not always be the case as we manage through certain headwinds, but um we feel like we're positioned well for um virtually any economic environment.",
        "And I'll remind you like I I I know there's maybe trepidation or concern among uh consumer health, this is when we shine.",
        "This is when Walmart is at its best, when we can deliver value for our members and customers.",
        "And so, you know, we look forward to to being able to put up financial results in any economic environment."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 33,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 707780.0,
      "end_time_ms": 727890.0,
      "speech": [
        "Michael, we want we want to make sure we're doing everything we can to keep prices as low as possible for our customers.",
        "Um I'm really pleased in the in the US business that our rollback count is up significantly over last year.",
        "It was it was a lot of fun to be able to tell all of our customers that Thanksgiving at Walmart this year will be a lower price than what it was a year ago.",
        "We worked really hard the last two years to keep it flat and it's coming down, and that's great for customers.",
        "As you had really stubborn inflation in categories like dry grocery.",
        "So I'm excited when I I'm in stores and I was in Uvalde, Texas the other day, the number of rollbacks that we have out on feature in front of customers right up front in categories like dry grocery.",
        "A lot of our fresh product uh categories have come in line, eggs and dairy have come back in line from a year ago.",
        "That's great for customers.",
        "And as John David said, that's the time that that we win.",
        "We deliver value and our team's ready to do that in any condition."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 34,
      "name": "Michael Lasser",
      "speaker_id": "michael_lasser_ubs",
      "start_time_ms": 729940.0,
      "end_time_ms": 730350.0,
      "speech": [
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 35,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 732600.0,
      "end_time_ms": 736620.0,
      "speech": [
        "Our next question is from the line of Rupesh Parikh with Oppenheimer.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 36,
      "name": "Rupesh Parikh",
      "speaker_id": "rupesh_parikh_oppenheimer",
      "start_time_ms": 737880.0,
      "end_time_ms": 748120.0,
      "speech": [
        "Good morning and thanks for taking my question.",
        "And I had a question just on the SG&A line.",
        "So at least in the Walmart US business, it appears both wage inflation and remodels appear to be a significant headwind on that line.",
        "So just curious if you expect those headwinds to continue into next year."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 37,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 749180.0,
      "end_time_ms": 777650.0,
      "speech": [
        "Uh Rupesh, good morning, it's John.",
        "Um, you know, the remodels, uh really that was a a big number of remodels that hit.",
        "I mentioned earlier, 197 remodels completed uh between late October and November 3rd.",
        "Of course, we'll continue our remodel program uh throughout next year.",
        "We have a a good plan on the number of sites and we're excited about the results that we're seeing from those.",
        "We we definitely hear um and and know that our results change for categories like apparel, home.",
        "Uh so I'm I think we're we have a good plan there.",
        "It was a higher number at the end of the quarter into the month than what we had original originally planned for.",
        "Some had slipped into later periods.",
        "So, um I think we'll have a a good balance as we move forward.",
        "Um on uh wages, um we're staffed ready for the holiday for the most part.",
        "Um stores and distribution centers are completely staffed.",
        "There are some some locations that will continue to hire and uh we we didn't add a we we didn't go out this year with a large number of people that we intended to hire for the holiday.",
        "Um we're happy with our full-time part-time ratio and where we need hours the next few weeks, which is really next week for food leading into the event Wednesday going into the Thanksgiving holiday and Black Friday, um we'll be ready to uh to manage the business with our existing associates."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 38,
      "name": "Rupesh Parikh",
      "speaker_id": "rupesh_parikh_oppenheimer",
      "start_time_ms": 778240.0,
      "end_time_ms": 778700.0,
      "speech": [
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 39,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 780920.0,
      "end_time_ms": 784720.0,
      "speech": [
        "Our next question is from the line of Edward Kelly with Wells Fargo.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 40,
      "name": "Edward Kelly",
      "speaker_id": "edward_kelly_wellsfargo",
      "start_time_ms": 786650.0,
      "end_time_ms": 814980.0,
      "speech": [
        "Hi, good morning everyone.",
        "Thank you for taking my question.",
        "Uh I have a question on the gross margin in in the US.",
        "Um, the margin was up a touch, you know, year over year.",
        "I think the expectation was that it maybe could have been better than that.",
        "I was hoping that you could provide some of the puts and takes around that.",
        "Um, I'm not sure if GLP-1 is maybe having a bigger impact uh there.",
        "So just thoughts on the gross margin this quarter and then maybe how we should think about that in Q4.",
        "And then a clarification around the legal charge.",
        "Um, I think you said 70, 75 million but then 40 basis points.",
        "So I'm not really sure um, I'm a little bit confused about about that about that.",
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 41,
      "name": "John David Rainey",
      "speaker_id": "john_david_rainey_wmt",
      "start_time_ms": 814980.0,
      "end_time_ms": 831790.0,
      "speech": [
        "Yeah, the the legal charge is 40 basis points.",
        "Go go with that number.",
        "And and as it relates to our guidance for the year, I'll point out that 7 to 7.5% operating income on our business is $125 million.",
        "That that is really more um it it's uh kind of a precise number for the size business that we are.",
        "And so that the the magnitude of some of these things like the hurricane, like the the legal charges push us to the uh to the lower end of that that range for the year.",
        "Um on general merchandise, um you know, we we did see some of the impact from um business mix uh in the quarter.",
        "We benefited from that.",
        "Uh the US was up I think five bips if if I remember correctly.",
        "But uh as as Doug noted too, like we're certainly trying to be um to to lower prices for our customers and make sure that uh we're providing the value that they need.",
        "So there's a balance of all of that that's impacting those numbers."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 42,
      "name": "Edward Kelly",
      "speaker_id": "edward_kelly_wellsfargo",
      "start_time_ms": 832700.0,
      "end_time_ms": 833090.0,
      "speech": [
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 43,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 835750.0,
      "end_time_ms": 839810.0,
      "speech": [
        "Our next question is from the line of Seth Sigman with Barclays.",
        "Please proceed with your question."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 44,
      "name": "Seth Sigman",
      "speaker_id": "seth_sigman_barclays",
      "start_time_ms": 840080.0,
      "end_time_ms": 856840.0,
      "speech": [
        "Hey, good morning everyone.",
        "I wanted to follow up on the consumer.",
        "I know it's discussed quite a few times today, but you know, you guys throughout the year have discussed a number of different signals of sensitivity, uh you know, buying more around paycheck cycles, seeking more value coming out for the promotional events.",
        "So just curious if you provide a little bit more perspective on that and maybe more specifically what you are seeing in terms of market share across income cohorts.",
        "Thank you."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 45,
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "start_time_ms": 858450.0,
      "end_time_ms": 862370.0,
      "speech": [
        "Yeah, for Walmart US specifically, John, is it relates to share?",
        "Yeah, uh good thanks for asking Seth.",
        "Um we've been we've been pleased to see share growth um all year and we've talked about that across the income groups um and uh what's what's been encouraging as of late is is a bit higher share growth in general merchandise categories.",
        "Uh we saw that month by month uh throughout the third quarter."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 46,
      "name": "Doug McMillon",
      "speaker_id": "doug_mcmillon_wmt",
      "start_time_ms": 865550.0,
      "end_time_ms": 903990.0,
      "speech": [
        "I don't know that we have a lot more to add on the consumer than what we've already said.",
        "Um I think we covered it.",
        "We're well positioned and I think our value proposition across categories and the way we're serving people which helps them save time as well as save money causes us to feel good about our position for the quarter.",
        "We get a lot of questions about what's happening in the US economy and other economies and what's happening with the consumer and we feel compelled sometimes to try and help explain what we're seeing, but to be clear from our point of view, we are front-footed, offensive and feeling good about our opportunities.",
        "Stores and clubs look good, um so that's the way we're thinking about the the quarter.",
        "I'll just wrap up here.",
        "We've gone a little over time.",
        "Um I'm as excited as I have been.",
        "Um we're executing our plan, we've got a good plan.",
        "Customers and members are choosing us and I think they have been choosing us not only because of price leadership, which they can count on and we'll continue, but also because we're making it easier to shop with us.",
        "Our NPS scores in stores and clubs are encouraging.",
        "Our NPS scores as they're improving across pickup and delivery are encouraging.",
        "We just want to save people money and time and make this easy and help them have a great holiday season and I think as it relates to the top line, um we can continue to expect that we will outperform and and do well.",
        "And as it relates to operating income growth, we'll grow it faster than sales over time because we've got this really good automation plan, the metrics that John David outlined when we started the call are really encouraging.",
        "We continue to feel very good about what that's going to mean for our business.",
        "And then as it relates to the business mix, having e-commerce grow so much um across our segments is awesome and encouraging, and a reminder that's a combination of first and third party.",
        "Um and as we grow with our suppliers and also with our marketplace sellers, we get those opportunities to to serve them with with ads, to serve them through fulfillment services, to monetize our data in different ways.",
        "So the business model change will continue, um which will enable that operating income growth to help us improve returns over time.",
        "So, you know, we're antsy about Christmas every year.",
        "This is my 33rd year and I feel like um it's a bit of a rerun in that it seems like we're always talking about customers being price conscious and we always will be, and they're always looking for the hot toy and the right gift for Christmas and they'll come buy food for us for Thanksgiving and food for the Christmas meal and then New Year's will come and we'll have clearance of prices after Christmas and we'll have a strong January because customers will react to clearance.",
        "Um at least the first couple of weeks when that's happening.",
        "And we'll update you on the fourth quarter and and tell you how it went, but um we feel really good about our position and excited about executing this plan and appreciate your ongoing support and uh interest in our company."
      ],
      "session": "question_and_answer"
    },
    {
      "index": 47,
      "name": "Operator",
      "speaker_id": "operator_1",
      "start_time_ms": 904650.0,
      "end_time_ms": 911720.0,
      "speech": [
        "Thank you.",
        "This concludes today's conference.",
        "You may disconnect your lines at this time.",
        "Thank you for your participation."
      ],
      "session": "question_and_answer"
    }
  ],
  "participant": [
    {
      "name": "Operator",
      "speaker_id": "operator_1",
      "description": "Operator",
      "role": "Operator"
    },
    {
      "name": "Steph Wissink",
      "speaker_id": "steph_wissink_wmt",
      "description": "WMT",
      "role": "SVP Investor Relations"
    },
    {
      "name": "Doug McMillon",
      "speaker_id": "doug_mcmillon_wmt",
      "description": "WMT",
      "role": "CEO"
    },
    {
      "name": "John David Rainey",
      "speaker_id": "john_david_rainey_wmt",
      "description": "WMT",
      "role": "CFO"
    },
    {
      "name": "John Furner",
      "speaker_id": "john_furner_wmt",
      "description": "WMT",
      "role": "CEO, Walmart US"
    },
    {
      "name": "Kath McLay",
      "speaker_id": "kath_mclay_wmt",
      "description": "WMT",
      "role": "CEO, Walmart International"
    },
    {
      "name": "Chris Nicholas",
      "speaker_id": "chris_nicholas_wmt",
      "description": "WMT",
      "role": "CEO, Sam's Club"
    },
    {
      "name": "Simeon Gutman",
      "speaker_id": "simeon_gutman_morganstanley",
      "description": "Morgan Stanley",
      "role": "Analyst"
    },
    {
      "name": "Kelly Bania",
      "speaker_id": "kelly_bania_bmocapitalmarkets",
      "description": "BMO Capital Markets",
      "role": "Analyst"
    },
    {
      "name": "Paul Lejuez",
      "speaker_id": "paul_lejuez_citi",
      "description": "Citi",
      "role": "Analyst"
    },
    {
      "name": "Kate McShane",
      "speaker_id": "kate_mcshane_goldmansachs",
      "description": "Goldman Sachs",
      "role": "Analyst"
    },
    {
      "name": "Michael Lasser",
      "speaker_id": "michael_lasser_ubs",
      "description": "UBS",
      "role": "Analyst"
    },
    {
      "name": "Rupesh Parikh",
      "speaker_id": "rupesh_parikh_oppenheimer",
      "description": "Oppenheimer",
      "role": "Analyst"
    },
    {
      "name": "Edward Kelly",
      "speaker_id": "edward_kelly_wellsfargo",
      "description": "Wells Fargo",
      "role": "Analyst"
    },
    {
      "name": "Seth Sigman",
      "speaker_id": "seth_sigman_barclays",
      "description": "Barclays",
      "role": "Analyst"
    }
  ],
  "transcript_id": "WMT_3Q2024",
  "title": "Walmart Fiscal Year 2024 Third Quarter Earnings Call",
  "quarter": 3,
  "year": 2024,
  "ticker": "WMT",
  "period": "3Q2024",
  "metadata": {
    "audio_duration_seconds": 4133.428,
    "language": "en-US",
    "transcription_confidence": {
      "overall_assessment": "High",
      "confidence_factors": [
        "Clear audio quality for primary speakers",
        "Operator introductions for analysts"
      ],
      "issues_encountered_counts": {
        "unintelligible_segments_in_speech": 2,
        "unknown_speaker_assignments": 0,
        "overlap_tags_used": 0
      }
    },
    "processing_notes": "The earnings call is for Walmart's Fiscal Year 2024 Third Quarter results. All speakers were identified based on introductions or context."
  }
}
```

COMPARE only the `participant` and `transcript` arrays; ignore every other key.
The ground-truth JSON is the source of truth.
The generated JSON is what we want to score.

──────────────────────── PRE-PROCESSING (MUST DO FIRST) ────────────────────────
1.  **Locate the inner object that holds BOTH `transcript` and `participant`.**
    *   Start from the top-level of the *Generated JSON*.
    *   While the current value is – a string resembling JSON **or** – a dict that DOES NOT contain both keys (`participant` and `transcript`),
    *   Stop when a dict containing **both** keys (`participant` and `transcript`) is found.
2.  **Align Turns:** Attempt to align each turn in the Generated JSON with the corresponding turn in the Reference JSON based on speaker (where possible) and sequential content. This is crucial for comparing `speech` accuracy. If alignment is ambiguous, prioritize sequential matching.

────────────────────────────────────────────────

WHAT COUNTS AS **“SAME”** (Do NOT penalize these for `speech` content):
- Nicknames / short forms ("Jim" <-> "James").
- Title abbreviations ("Vice President" <-> "VP").
- Filler words ("um," "uh"), false starts, minor self-corrections, punctuation, capitalization.
- Paraphrases *within the `speech` content* that preserve 100% of the factual and semantic meaning of the original utterance.

**CRITICAL INFORMATION DEFINITION (for `speech` content):**
- **Numeric Tokens:** (see guardrail below).
- **Key Entities:** Specific product names (e.g., "Meteor Lake," "Gaudi2"), company names, major technology terms (e.g., "EUV," "RibbonFET," "PowerVia").
- **Performance/Financial Descriptors:** Terms indicating direction or magnitude (e.g., "increased," "decreased," "strong," "weak," "on track," "delayed," "exceeded," "missed").
- **Strategic Elements:** Key goals, timelines, commitments, market segments discussed.
- **Direct answers to analytical questions.**

--------------------------------------------------------------------
NUMERIC-TOKEN GUARDRAIL (financial accuracy is sacred – applies to `speech` content)
**Numeric token** = digits-only, digits + unit/currency/%, quarters, dates
(e.g., `17.1 million`, `88.8%`, `$125.3M`, `Q3`, `FY 2023`, `September 14th`).

ANY numeric token mismatch in an aligned turn's `speech` → automatically classify as **CRITICAL TRANSCRIPTION ERROR** for that specific token.
--------------------------------------------------------------------
SCORING (start at **1.00**, clamp 0.00–1.00, round two decimals)

### A. TRANSCRIPTION ACCURACY of `speech` Content (0.90 max penalty)
*This section evaluates how accurately the `speech` text in each *aligned turn* reflects the reference.*

  −0.001  **Trivial Wording Difference**: Different non-critical words used, but meaning, nuance, and all facts 100% intact. (e.g., "We believe" vs. "It's our view").
  −0.002  **Moderate Wording Deviation**: Some non-critical words are incorrect or poorly chosen, slightly impacting clarity or naturalness, but critical information (as defined above) is still accurate.
  −0.005  **Significant Non-Critical Error/Omission**: A non-critical phrase or sentence part is inaccurately transcribed or omitted, impacting overall readability/completeness of the turn but not misrepresenting critical facts.
  −0.005  **CRITICAL TRANSCRIPTION ERROR**:
           *   Any **Numeric Token Mismatch** (per guardrail).
           *   A **Key Entity** is misidentified, misspelled significantly (beyond a minor typo), or omitted.
           *   A **Performance/Financial Descriptor** is incorrect (e.g., "increased" transcribed as "decreased" or omitted when present).
           *   A **Strategic Element** is factually misrepresented or omitted.
           *   *Apply this penalty for each distinct instance of a critical error within a single turn.* (e.g., if a turn has 2 numeric errors and 1 wrong product name, it's 3 x -0.005 for that turn from this category, before caps).


### B. SPEAKER ATTRIBUTION & STRUCTURAL INTEGRITY (0.10 max penalty)

*This section evaluates speaker assignment and overall transcript structure.*

  −0.001  **Minor Name Variant in Participant List**: Typo or inconsistent naming for a *listed* participant beyond accepted nickname rules (e.g., "Patrick Gelsingr" vs "Patrick Gelsinger").
  −0.003  **Incorrect Speaker Attribution**: `speech` content is correctly transcribed for a turn but attributed to the wrong speaker.
  −0.001  **Missing Non-Operator Participant from List**: A speaker (other than "Operator") present in the Reference `participant` list is entirely missing from the Generated `participant` list.
  −0.002  **Missing Turn (Structural Omission)**: An entire turn (speaker + `speech`) present in the Reference is completely absent in the Generated transcript. This is a structural penalty; the content accuracy of that missing speech is inherently 0 and penalized under Section A implicitly by its absence.


**CLARIFICATION ON PENALTIES FOR MISSING CONTENT/TURNS:**
- If a **portion of `speech` containing critical information is missing *within an otherwise aligned turn***, it's penalized under Section A (e.g., as one or more Critical Transcription Errors).
- If an **entire turn is missing from the Generated transcript**, it incurs the "Missing Turn (Structural Omission)" penalty (-0.002) from Section B. The content of this turn is, by definition, not transcribed, and thus contributes to potential penalties in Section A as if all its critical information was omitted (up to the 0.90 cap for Section A). The goal is not to double-penalize excessively but to ensure both structural and content loss are recognized. The primary hit will be on content accuracy.

Do NOT penalize `session` labels.

--------------------------------------------------------------------
EVALUATION PROCESS:
1. Follow the pre-processing steps exactly
2. Apply the scoring rules above to calculate a precise score
3. Round the score to 2 decimal places
4. Select the closest available choice to your calculated score


step-by-step calculating the score, then select the final choice that matches your calculated score.

Answer the question by calling `select_choice` with your reasoning in a step-by-step matter to be sure that your conclusion is correct. Avoid simply stating the correct answer at the outset. Select a single choice by setting the `choice` parameter to a single choice from ['0.00', '0.01', '0.02', '0.03', '0.04', '0.05', '0.06', '0.07', '0.08', '0.09', '0.10', '0.11', '0.12', '0.13', '0.14', '0.15', '0.16', '0.17', '0.18', '0.19', '0.20', '0.21', '0.22', '0.23', '0.24', '0.25', '0.26', '0.27', '0.28', '0.29', '0.30', '0.31', '0.32', '0.33', '0.34', '0.35', '0.36', '0.37', '0.38', '0.39', '0.40', '0.41', '0.42', '0.43', '0.44', '0.45', '0.46', '0.47', '0.48', '0.49', '0.50', '0.51', '0.52', '0.53', '0.54', '0.55', '0.56', '0.57', '0.58', '0.59', '0.60', '0.61', '0.62', '0.63', '0.64', '0.65', '0.66', '0.67', '0.68', '0.69', '0.70', '0.71', '0.72', '0.73', '0.74', '0.75', '0.76', '0.77', '0.78', '0.79', '0.80', '0.81', '0.82', '0.83', '0.84', '0.85', '0.86', '0.87', '0.88', '0.89', '0.90', '0.91', '0.92', '0.93', '0.94', '0.95', '0.96', '0.97', '0.98', '0.99', '1.00'].
Thinking Thoughts (experimental)

Expand to view model thoughts
chevron_right

Okay, I will now proceed with the detailed audit, applying the scoring rules.

1. Pre-processing & Alignment

• The generated JSON is at the top level.
• Turns are aligned sequentially, noting discrepancies and speaker changes.

2. Participant List Comparison (Section B)

• Reference Participants (excluding Operator): 18
  • Stephanie Schiller Wissink, Doug McMillon, John Rainey, Simeon Gutman, Kelly Bania, John Furner, Paul Lejuez, Kathryn McLay, Christopher Nicholas, Katharine McShane, Michael Lasser, Rupesh Parikh, Krisztina Katai, Robert Ohmes, Scot Ciccarelli, Edward Kelly, Peter Benedict, Seth Sigman
• Generated Participants (excluding Operator): 14
  • Steph Wissink (OK, short form for Stephanie Schiller Wissink)
  • Doug McMillon (OK)
  • John David Rainey (OK, full name for John Rainey)
  • John Furner (OK)
  • Kath McLay (OK, short form for Kathryn McLay)
  • Chris Nicholas (OK, short form for Christopher Nicholas)
  • Simeon Gutman (OK)
  • Kelly Bania (OK)
  • Paul Lejuez (OK)
  • Kate McShane (OK, short form for Katharine McShane)
  • Michael Lasser (OK)
  • Rupesh Parikh (OK)
  • Edward Kelly (OK)
  • Seth Sigman (OK)
• Missing Non-Operator Participants from Generated List:
  1. Krisztina Katai (-0.001)
  2. Robert Ohmes (-0.001)
  3. Scot Ciccarelli (-0.001)
  4. Peter Benedict (-0.001)
• Participant List Penalty (Section B): 4 * -0.001 = -0.004

3. Transcription Accuracy & Structural Integrity (Turn-by-Turn)

• Ref Turn 3 (John Rainey) / Gen Turn 3 (John David Rainey):

  • Ref: "six supercenters" / Gen: "six more centers". Trivial Wording Difference. Penalty: -0.001
  • Ref: "sales have grown more than 60%" / Gen: "sales have grown more than 6%". CRITICAL TRANSCRIPTION ERROR (Numeric Token Mismatch). Penalty: -0.005
  • Ref: "favor profitability in Q4" / Gen: "favor profitability in Q3". CRITICAL TRANSCRIPTION ERROR (Misstatement of strategic timing). Penalty: -0.005
  • Turn 3 Subtotal: -0.011

• Ref Turn 6 (John Rainey) / Gen Turn 7 & 8 (John David Rainey):

  • Ref: "those were related to -- largely related" / Gen: "most were related or largely related". Trivial Wording Difference. Penalty: -0.001
  • Ref: "shared at better day" / Gen: "shared at investor day". Assuming "better day" is a typo in Ref for the common "Investor Day", no penalty on Gen. If "better day" was correct, this would be an error. Given instructions to treat Ref as truth, but acknowledging commonality, this is tricky. However, "Investor Day" is the far more standard term. Let's assume this is a ref error and not penalize gen. If strictly following ref, it's an error. For now, considering Ref possibly in error here on a non-critical term.
  • Turn 6 Subtotal: -0.001

• Ref Turn 15 (John Furner) / Gen Turn 18 & 19 (John Furner):

  • Ref: "Latour and Manish" / Gen: "Tom Ward and Manish". Assuming "Latour" is correct per reference as truth. CRITICAL TRANSCRIPTION ERROR (Key Entity - Name). Penalty: -0.005
  • Turn 15 Subtotal: -0.005

• Ref Turn 17 (Christopher Nicholas) / Gen Turn 21 (Chris Nicholas):

  • Ref: "GM and club pick, grocery, pantry" / Gen: "GM and uh so grocery pantry". Omission of "club pick" (a specific service/item category). CRITICAL TRANSCRIPTION ERROR (Omission of Key Entity/Service). Penalty: -0.005
  • Turn 17 Subtotal: -0.005

• Ref Turn 23 (John Rainey) / Gen Turn 28 (John David Rainey):

  • Ref: "Not to be alarmed." / Gen: "Not to be alarmist.". Trivial Wording Difference. Penalty: -0.001
  • Turn 23 Subtotal: -0.001

• Missing Sections (Krisztina Katai, Robert Ohmes, Scot Ciccarelli, Peter Benedict):

  • Krisztina Katai Section (Ref Turns 32-38):

    • 7 turns missing. Structural Penalty (Section B): 7 * -0.002 = -0.014
    • Content Penalty (Section A - estimated): Questions on units, price gaps, new goals; answers.
      • Turn 33 (Katai Q): units, price gap, new goals (3 critical)
      • Turn 35 (Furner A): answer to units/price (2 critical)
      • Turn 36 (McMillon A): answer to GM/Food dynamic (3 critical)
      • Turn 37 (McLay A): reflection on new role (1 critical)
      • Turn 38 (Nicholas A): reflection on new role (1 critical)
      • Estimated 10 critical elements * -0.005 = -0.050 (Section A)

  • Robert Ohmes Section (Ref Turns 39-46):

    • 8 turns missing. Structural Penalty (Section B): 8 * -0.002 = -0.016
    • Content Penalty (Section A - estimated): Questions on LIFO, deflation, wages; answers.
      • Turn 40 (Ohmes Q): LIFO, dry grocery deflation, wage pressures (3 critical)
      • Turn 41 (Rainey A): LIFO (1 critical)
      • Turn 43 (Rainey A): LIFO categories (1 critical)
      • Turn 44 (McMillon A): inflation/deflation, wages (4 critical)
      • Turn 46 (McMillon A): wage plan (1 critical)
      • Estimated 10 critical elements * -0.005 = -0.050 (Section A)

  • Scot Ciccarelli Section (Ref Turns 47-51):

    • 5 turns missing. Structural Penalty (Section B): 5 * -0.002 = -0.010
    • Content Penalty (Section A - estimated): Questions on remodels, earnings flow; answers.
      • Turn 48 (Ciccarelli Q): remodels, earnings flow (2 critical)
      • Turn 49 (Furner A): remodel acceleration (2 critical)
      • Turn 51 (Furner A): remodel profit flow (1 critical)
      • Estimated 5 critical elements * -0.005 = -0.025 (Section A)

  • Peter Benedict Section (Ref Turns 55-57):

    • 3 turns missing. Structural Penalty (Section B): 3 * -0.002 = -0.006
    • Content Penalty (Section A - estimated): Question on GLP-1; answer.
      • Turn 56 (Benedict Q): GLP-1 (1 critical)
      • Turn 57 (Furner A): GLP-1 answer (1 critical)
      • Estimated 2 critical elements * -0.005 = -0.010 (Section A)

• Ref Turn 53 (Edward Kelly) / Gen Turn 40 (Edward Kelly):

  • Ref: "margin was up [ 5 ] year-over-year" / Gen: "margin was up a touch". John Rainey previously stated "Walmart U.S. gross margins increased 5 basis points". So "5" or "5 bps" was likely said. "a touch" is a Moderate Wording Deviation. Penalty: -0.002
  • Turn 53 Subtotal: -0.002

• Ref Turn 60 (Doug McMillon) & Ref Turn 61 (John Furner) / Gen Turn 45 (John Furner):

  • Ref Turn 60 (Doug McMillon): "Yes. for Walmart U.S. specifically, John, as it relates to share?"
  • Gen Turn 45 attributes this sentence to John Furner. Incorrect Speaker Attribution. Penalty (Section B): -0.003

4. Summarize Penalties

• Section A Penalties (Transcription Accuracy):

  • Turn 3: -0.001 (trivial) - 0.005 (critical) - 0.005 (critical) = -0.011
  • Turn 6: -0.001 (trivial)
  • Turn 15: -0.005 (critical)
  • Turn 17: -0.005 (critical)
  • Turn 23: -0.001 (trivial)
  • Katai Missing Content: -0.050
  • Ohmes Missing Content: -0.050
  • Ciccarelli Missing Content: -0.025
  • Turn 53: -0.002 (moderate)
  • Benedict Missing Content: -0.010
  • Total Section A: -0.011 - 0.001 - 0.005 - 0.005 - 0.001 - 0.050 - 0.050 - 0.025 - 0.002 - 0.010 = -0.160

• Section B Penalties (Speaker & Structure):

  • Participant List Missing: -0.004
  • Katai Missing Turns: -0.014
  • Ohmes Missing Turns: -0.016
  • Ciccarelli Missing Turns: -0.010
  • Benedict Missing Turns: -0.006
  • Incorrect Speaker Attribution (Turn 60/Gen 45): -0.003
  • Total Section B: -0.004 - 0.014 - 0.016 - 0.010 - 0.006 - 0.003 = -0.053
  • (This is within the 0.10 max for Section B)

• Total Combined Penalties: -0.160 (A) - 0.053 (B) = -0.213

5. Final Score Calculation

• Start Score: 1.00
• Total Penalties: -0.213
• Calculated Score: 1.00 - 0.213 = 0.787
• Rounded Score: 0.79

The significant penalty is due to the large blocks of missing Q&A from four different analysts, impacting both structural integrity (missing turns) and content accuracy (loss of critical information from questions and answers).

{
  "choice": "0.79",
  "reason": "The generated transcript has several issues when compared to the reference:\n\n**Section A: Transcription Accuracy Penalties (-0.160 total)**\n*   **Numeric/Critical Errors in Matched Turns:**\n    *   Turn 3 (John Rainey): \"sales 60%\" (ref) vs \"6%\" (gen) is a critical numeric error (-0.005). \"profitability in Q4\" (ref) vs \"Q3\" (gen) is a critical timing error (-0.005). \"supercenters\" vs \"centers\" is trivial (-0.001).\n    *   Turn 15 (John Furner): \"Latour\" (ref) vs \"Tom Ward\" (gen) is a critical name entity error (-0.005, assuming ref is truth).\n    *   Turn 17 (Christopher Nicholas): Omission of \"club pick\" is a critical service/entity omission (-0.005).\n    *   Turn 53 (Edward Kelly): \"[ 5 ]\" (ref, likely 5bps) vs \"a touch\" (gen) is a moderate wording deviation for a numeric (-0.002).\n*   **Trivial Wording Differences in Matched Turns:** Several minor instances (e.g., Turn 6, Turn 23) totaling -0.002.\n*   **Content Loss from Missing Analyst Sections:**\n    *   Krisztina Katai section (7 turns): Estimated 10 critical elements missing (-0.050).\n    *   Robert Ohmes section (8 turns): Estimated 10 critical elements missing (-0.050).\n    *   Scot Ciccarelli section (5 turns): Estimated 5 critical elements missing (-0.025).\n    *   Peter Benedict section (3 turns): Estimated 2 critical elements missing (-0.010).\n\n**Section B: Speaker Attribution & Structural Integrity Penalties (-0.053 total)**\n*   **Missing Participants from List:** Krisztina Katai, Robert Ohmes, Scot Ciccarelli, Peter Benedict are all missing from the generated participant list (4 * -0.001 = -0.004).\n*   **Missing Turns (Structural Omission):**\n    *   Krisztina Katai section: 7 turns missing (-0.014).\n    *   Robert Ohmes section: 8 turns missing (-0.016).\n    *   Scot Ciccarelli section: 5 turns missing (-0.010).\n    *   Peter Benedict section: 3 turns missing (-0.006).\n*   **Incorrect Speaker Attribution:** The first sentence of Ref Turn 60 (Doug McMillon) is incorrectly attributed to John Furner in Gen Turn 45 (-0.003).\n\n**Total Calculation:**\nStarting score: 1.00\nSection A penalties: -0.160\nSection B penalties: -0.053\nCombined penalties: -0.213\nFinal Score: 1.00 - 0.213 = 0.787, rounded to **0.79**."
}