Walmart’s CFO discusses premium membership and price reductions

Walmart CFO John David Rainey said Wednesday (June 12) that about 20% of operating income generated in the most recent fiscal quarter came from Walmart+ and Walmart Connect, the retailer’s in-house advertising business.

“What’s great about Walmart Plus is the behaviors we see from these customers. It’s worth noting that they spend about twice as much as the average customer. So we want more and more of our customers to use us in this way. They do too, maybe it’s intuitive, but they shop more often and have smaller baskets. Sometimes they use us to purchase one or two products that they may have considered using another retailer for this purpose in the past. So as we continue to refine our offering in this region, become better at providing the mix of merchandise, the offering that customers expect, and improve our ability to deliver it to them when they expect it, we continue to see growth there,” Rainey he said at the Evercore ISI Consumer Conference.

Evercore research indicates that approximately 15 million U.S. consumers are currently Walmart+ members. Rainey did not confirm or deny that number, but said the success of the membership program would not depend on the number of memberships sold. The seller still does not disclose details of the program. A Walmart+ membership costs $98 per year, or a monthly InHome delivery of $12.95 can be added for $7 per month.

Last week, Walmart reported that online delivery is growing faster than curbside pickup as the number of Walmart+ members grows. Free shipping is a subscription benefit. Rainey said the U.S. e-commerce industry is several years away from profitability, but e-commerce at Sam’s Clubs is already profitable.

Walmart is also lowering prices on more products. The company said it made 7,000 price recalls, a 45% increase from last year.

“I think it will be a topic of conversation probably every quarter. And it is dynamic. It’s moving. There are certainly areas where we think it makes more sense to invest more in price gaps. There are other areas where we feel very comfortable,” Rainey said.

He said that recalls are typically paid for by suppliers, but Walmart has seen a larger number of them over the past two quarters. Rainey said lower prices are driving higher unit sales and that’s a priority for Walmart US this year as inflation begins to decline.

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