Walmart Q3 FY2023 Earnings: Share Gains + Expense Discipline = Sector Bellweather

A few highlights:

* eCommerce is up 16%, solid. Overall US 8.2% comp sales growth, improving AOV and # transactions.

* Walmart Connect US Advertising up 40% y/y

* 4.8% operating income, solid and steady.

* EPS miss due to JD investment

* global inventory levels are up 12.4% for WMT US for the quarter, significantly down from earlier this year. a lot of this is inflation, not units.

* depth of inventory decision is particularly critical at the moment (my friends in inventory planning will be busy!)

* All WMT US Mkpl customers will be automatically given self-service ad accounts. 8k sellers added in Q3.

* private brands in grocery increased 130bps as some even high-value consumers traded down.

* Walmart Mexico 30% of transactions use fulfillment services (I think for marketplace)

* Q4 guidance staying the same, but adding Q3 surprise/beat.

And a few of my comments:

1 - How happy is WMT that they divested ASDA in 2021? Limited European exposure makes Intl look great.

2 - JD China exposure is troublesome and a huge drain. ($1.11 per share loss!)

3 - Retail is a category-by-category dogfight at the moment. There are places to be aggressive and places to be cautious. A balanced four-quadrant approach to planning is needed.

4 - Smart move to give all marketplace merchants ad accounts. Any scaled marketplace without an ad business is missing out.

5 - Walmart is a great operator that understands its business.

Comp sales growth 5.5% for the rest of the year, operating income decline ~7%

6 - Most of the inventory is in stores, not in supply chains at this point.

7 - Sams Club continues to crush it. 11 quarters of double-digit comp sales growth.

8 - Troubled categories are in general merchandise: apparel, electronics, and home. Offset by gains in consumables and groceries.

Category matters at the moment. Walmart continues to gain share.