Walmart's AI chatbot Sparky drives 35% higher sales as retail giant expands global strategy

Walmart results expected to highlight big plans for AI

New York (AFP) - Fresh off of achieving a $1 trillion market value, Walmart will report earnings Thursday as markets look for signs the retail giant can accelerate growth with the aid of artificial intelligence. The results cover the crucial fourth quarter comprising the holiday shopping season and will be the first with Chief Executive John Furner, who ascended to the top post on February 1 after previously leading the company's giant US division. Solid earnings from the big-box chain in recent quarters have underscored growing popularity with wealthier US consumers, as well as with less prosperous consumers in its home market, where some 90 percent of the population lives within 10 miles of a company location. Analysts expect modestly higher quarterly profits to conclude a year of nearly five percent revenue growth to more than $700 billion. Walmart on February 3 overtook the $1 trillion valuation marker, a rare occurrence for a brick-and-mortar legacy company that began as a family store in Arkansas in 1962. Just three other non-tech companies have achieved this valuation: oil giant Saudi Aramco, Warren Buffett's conglomerate Berkshire Hathaway, and pharma company Eli Lilly. "Investors have sort of put companies like Walmart, Costco and Amazon into one bucket and the rest of the retailers are in a slower-growth bucket," said Arun Sundaram, a senior equity analyst at CFRA Research. Walmart announced late last year that it was shifting its stock listing from the New York Stock Exchange to the Nasdaq. "Moving to Nasdaq aligns with the people-led, tech-powered approach to our long-term strategy," Walmart Chief Financial Officer John David Rainey said of the move. "Walmart is setting a new standard for omnichannel retail by integrating automation and AI to build smarter, faster, and more connected experiences for customers," he added. AI agents When Walmart last reported results in November, executives described the overall impact of President Donald Trump's tariffs as somewhat more muted than initially feared. "We continue to benefit from higher income families choosing to shop with us more often," said former CEO Doug McMillion. "While lower income families have been under additional pressure of late, we're encouraged by how our teams are meeting them with greater value across categories." The company benefited from strong e-commerce growth and from gains in its overseas markets, including China where Walmart now has 60 Sam's Club locations. Executives said they had reduced shipping costs through automation and pointed to the announcement of a partnership with OpenAI that lets consumers make purchases through ChatGPT. Walmart in January also announced an AI venture with Google, whereby consumers can turn to the Gemini program for products. Walmart executives have touted the potential for AI to provide greater personalization for consumers and help with analyzing vast amounts of data to better manage inventory. There is also greater talk of "agentic commerce" where AI assumes more sophisticated tasks, such as executing weekly supermarket orders based on a consumer's history or searching the Internet for the right goods for a holiday meal or a party. These advances offer both opportunities and risks for retailers, said a CFRA report from last fall. "For consumers, agentic commerce should save both time and money," CFRA said. "However, for retailers and suppliers, the implications are more nuanced, given the likelihood of reduced direct interaction with customers and more engagement with other AI agents." A note from UBS predicted that Thursday's earnings announcement would support a "bull" case for Walmart, pointing to key executive appointments as evidence of the company's stands "well poised to take its modernization further." These include the choice of David Guggina to succeed Furner as head of Walmart's US division. Guggina most recently led e-commerce at Walmart US. Before that, he worked on Walmart's supply chain and spent 10 years in leadership roles at Amazon. "The retailer expects e-commerce to disproportionately drive its growth," UBS said, adding that Guggina "has the background and the skill set to lead this effort."

Sparks fly as Walmart's AI shopping assistant gets ready to go global

A good start for Walmart's new CEO John Furner as the retail giant saw overall Q4 revenue rose 5.6% to $190.66 billion, with online sales soaring 27% year-on-year, fuelled by business from a wealthier demographic. For the full year, revenue of $190.7 billion was up 4.9%, with e-commerce revenue up 24%. While Furner is new to the global CEO hot seat, after seven years in charge of Walmart US, expect no change when it comes to ongoing tech investment priorities as he declares: The investments we've made in technology and supply chain help us deliver items even faster. They're paying off. Here in the US, customers using Fast Delivery, and that's delivering under three hours, grew more than 60% for the year. We know that customers and members from around the world are more alike than they are different. They love great quality products, value for their money and, more often, they're turning to Walmart for speed of delivery on a broad assortment. Being people-led and tech-powered helps our associates to find better ways to serve customers and members with our growing assortment, faster delivery speeds and experiences they love. The way we're using technology and AI is helping us create great customer solutions, reduce friction, simplify decision-making and pinpoint where our inventory is, all while maintaining the trust we've earned from our customers and members. Walmart will also continue to develop its own proprietary tech, he confirms: We aren't just embracing the tools that are changing the way people shop. We're creating them. We're enhancing our shopping assistants, like Sparky, and building new experiences with partners like OpenAI and Alphabet that are shaping the future of agentic commerce. Sparky, launched last year, is seeing good momentum, says Furner, with customer engagement up. That's translating onto the bottom line as customers who use Sparky have an average order value that's about 35% higher than non-Sparky customers, so expect further emphasis to be placed here. Sparky is also seen as helping Walmart evolve from traditional search to intent-driven commerce. Furner explains: What Sparky can do is it can help understand really clearly what it is that you're trying to accomplish in your life, whether that's a birthday party or a camping trip or planning meals for the week or just planning dinner for this evening. And then we can generate you great, unique solutions real time if we need to. Or by knowing you a bit better than we did in the past, we can help suggest things to you that are more in line with your own personal preferences. So all this put together, we believe, is a great way for customers to be able to trust that Walmart will save them time while shopping, save them time in the transaction, but also save them time and delivery. He adds: I love how Sparky perfectly fits within our omni-channel strategy. It connects digital intent to fulfillment through forward deployed inventory and 1.5 million associates here in the US. When Sparky builds a basket, we execute it through fast delivery, pickup or in-store, turning AI engagement into immediate physical outcomes. As we expand Sparky across experiences like voice, in-store and through services, we expect continued acceleration in customer adoption and the impact on commerce. And currently US-only Sparky is set to go global: We've started with Sparky here in the US, but we know that winning in a connected world means we need to deliver consistent experiences across markets. And to do that, we need to focus on technology platforms that are built for a global business. The idea of build once, scale globally makes us faster, lowers costs and ensures consistency. We'll use AI to layer on top of existing platforms, getting better leverage out of the assets we already own. This platform-centric approach helps us scale innovation consistently and reduce capital intensity. We have a clear strategy, and that's an omni-strategy. It's working in the United States and it's working around the world. Once upon a time every quarterly earnings announcement from Walmart would be accompanied by questions about when the e-commerce investment would turn into positive ROI rather than ever growing CapEx, much as Wall Street does today with AI firms and their budgets! No more! According to CFO John Rainey, Walmart has reached a point where as far as e-commerce profitability is concerned, "we don't even really talk about this internally any more", adding: We've far surpassed the breakeven level. We were profitable in each of the four quarters in the US segment, and the momentum is only upward from here. We've been enjoying roughly double-digit incremental margins in eCommerce. We don't expect that to change. It's a situation offering learnings to other retailers and their omni-channel thinking as Rainey explains: The nature of this business is you build a large digital platform and the marginal cost of growth is very low. You don't have to continue to build that platform to achieve the next percentage point of growth. And so we're enjoying the scale economics that come from a digital business. That's not going to change. What might change is the macro-economic picture in the US. While spending continues to be "resilient", there is a clear divide emerging within the customer base, says Furner: In the US, we see the customers choiceful in their spending. Again, this quarter, the majority of our share gains came from households making more than $100,000. For households earning below $50,000, we continue to see that wallets are stretched. And in some cases, people are managing spending paycheck to paycheck. That will need watching, but overall, Furner is off to a strong start.

Meet Sparky -- the AI Chatbot Walmart Says Is a Whiz at Sales

Get personalized, AI-powered answers built on 27+ years of trusted expertise. Sparky is cranking up sales at a massive retailer. Walmart's AI chatbot -- named for the company's yellow logo -- is bolstering its shoppers' spending, company executives said Thursday. About half of Walmart (WMT) app users have tried the 20-month old tool, CFO John David Rainey said on a conference call on the company's fourth-quarter results, and those who engage with Sparky place, on average, a 35% larger order. "Simply put, Sparky is helping customers find the things they need," Rainey said, according to a transcript made available by AlphaSense. "It's strengthening our digital unit economics as it scales." Walmart plans to expand Sparky's abilities and introduce the tool abroad. But it's also collaborating with Alphabet's Google (GOOG) and OpenAI to ensure Walmart products are easily available to those using their AI chatbots -- Gemini and ChatGPT, which pull from multiple sites and platforms. The company, which has lately acquired a market value of $1 trillion, has sought to establish itself in investors' minds as a tech powerhouse as well as a retail giant, recently moving to the Nasdaq 100 index viewed as a technology stock benchmark. "We're approaching AI development through partnerships," Rainey said. "This lets tech companies do what they do best -- develop innovative technology -- and it provides us clarity to do what we do best -- to translate the best of tech to retail experiences." Other new technology, including the automation of distribution and e-commerce facilities, should boost productivity, Rainey said. That's built into Walmart's forecast of a 3.5% to 4.5% year-over-year increase in sales for the year ahead, Rainey said. The outlook takes into account a "somewhat unstable" backdrop, given concerns about limiting hiring, student loan delinquencies and downbeat consumer sentiment, he said. Consumers may benefit from larger tax refunds, CEO John Furner said. But so far, they remain "choiceful," with many looking to save, but being willing to pay for the convenience of delivery, Furner said. Households with an annual income of $50,000 or less are showing "some stress," Furner said. "We continue to see that wallets are stretched and, in some cases, people are managing spending paycheck to paycheck," Furner said, according to the transcript. Walmart U.S. reported a 4.6% year-over-year boost in comparable sales, excluding gasoline, in the fourth-quarter, while Sam's Club U.S. reported a 4% increase, according to a press release. The company narrowly beat headline expectations, with $190.7 billion in sales and $0.74 in adjusted earnings per share.