Wal-Mart Stores Inc. (WMT) Q1 2022 Earnings Call Transcript

Wal-Mart Stores Inc. (NYSE: WMT) Q1 2022 earnings call dated May. 18, 2021.

Corporate Participants:

Dan Binder — Vice President, Investor Relations

Doug McMillon — President and Chief Executive Officer

Brett Biggs — Executive Vice President and Chief Financial Officer

John Furner — President and Chief Executive Officer, Walmart U.S.

Analysts:

Karen Short — Barclays — Analyst

Paul Trussell — Deutsche Bank — Analyst

Simeon Gutman — Morgan Stanley — Analyst

Bob Drbul — Guggenheim — Analyst

Kate McShane — Goldman Sachs — Analyst

Peter Benedict — Robert W. Baird — Analyst

Michael Lasser — UBS — Analyst

Stephanie Wissink — Jefferies — Analyst

Edward Yruma — KeyBanc Capital Markets — Analyst

Michael Baker — D.A. Davidson — Analyst

Kelly Bania — BMO Capital — Analyst

Scot Ciccarelli — RBC Capital Markets — Analyst

Chuck Grom — Gordon Haskett — Analyst

Robby Ohmes — Bank of America — Analyst

Presentation:

Operator

Greetings. Welcome to Walmart’s Fiscal 2022 First Quarter Earnings Call. [Operator Instructions]

I would now like to turn the conference over to your host, Dan Binder, with Investor Relations.

Dan Binder — Vice President, Investor Relations

Thank you, Rob.

Good morning and welcome to Walmart’s first quarter fiscal 2022 earnings call. I’m joined by a few members of our executive team, including Doug McMillon, Walmart’s President and CEO; Brett Biggs, Executive Vice President and Chief Financial Officer; and John Furner, President and CEO of Walmart US. In a few moments, Doug and Brett will provide you with an update on the business and discuss first quarter results that will be followed by our question-and-answer session.

Before I turn the call over to Doug, let me remind you that today’s call is being recorded and will include 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.

It is now my pleasure to turn the call over to Doug McMillon.

Doug McMillon — President and Chief Executive Officer

Good morning and thanks for joining today’s call.

Our results for the first quarter were strong. We’re pleased with our sales momentum and adjusted EPS growth of 43% versus last year. We had strong performance in all three segments. As the pandemic continues, it’s impacting the countries where we operate in different ways. So our teams are adapting to overcome the challenges and deliver the strong results we’re sharing today. We continue to be grateful to all of our associates for their dedication to serving others.

2021 brings its own unique challenges and uncertainty, but overall my optimism is higher than it was at the beginning of the year for several reasons. In the US, economic stimulus is clearly having an impact, but we also see encouraging signs that our customers want to get out and shop. Our execution is improving despite the hurdles presented by the pandemic. The second half will likely have more uncertainty than a normal year, but we like our position. Our stores are getting stronger and our e-commerce capabilities are expanding as we continue to grow. Customers will decide how and when they want to shop and they’ll find us ready whether they want to shop in store, pick up an order or have it delivered.

Key elements of our strategy are coming together nicely. We saw an acceleration of traffic in our stores, gained market share in grocery, improved in-stock levels and grew e-commerce sales globally by 43% in constant currency, excluding recent divestitures. Global e-commerce penetration now represents over 12% of total Company sales, an increase of 340 basis points over last year.

Looking ahead, we’ll navigate the supply chain challenges and inflationary pressures, whether that’s in cost of goods or wages. We’ll monitor our price gaps and adjust as appropriate with both customers and shareholders in mind. As it relates to COVID-19, the past several weeks have been more challenging in some countries. India, Canada, Chile and South Africa are priorities at the moment. Supporting our associates is our primary focus, but we’re also investing our resources to support the countries as we find opportunities to do so.

In India, we’re donating oxygen concentrators, PPE and financial support. When it comes to helping people get vaccinated, we’re engaged in multiple countries. In the US, we’ve administered millions of doses. We’re taking steps to encourage our associates and everyone to become vaccinated. Given CDC guidance, our US associates that have been vaccinated can now work without a mask if they choose to, and we’ve added a cash incentive as one more step to encourage vaccinations. All of our Walmart and Sam’s Club pharmacies in the US are administering vaccines, and we can provide them without an appointment. We’ve also collaborated with national and local organizations to support more than 200 community events across the country so far. In India, we’re facilitating vaccinations for our associates and their households and our Flipkart and PhonePe contractors, more 200,000 people. Across the countries where we operate, we’ll keep looking for more places to make a difference. This pandemic won’t be over until it’s over for everyone.

In addition to combating the pandemic, we also announced a new commitment to US manufacturing during the quarter. Over the next 10 years, we’ve set a goal to purchase an additional $350 billion on items made grown or assembled in the US. We estimate this commitment will create more than 750,000 new American jobs and avoid 100 million metric tons of CO2 emissions. We also want to make it easier for manufacturing in the US to flourish. That’s why we’re launching an initiative called American Light Houses. We’ll bring together partners from the supplier community, academia and government, among other groups, to identify and overcome top-down barriers to US production.

We also have other exciting news to share as we continue to invest in the technologies of tomorrow. In collaboration with NGE North America, a power generator and services company, we’re adding more than 500 MW to the US renewable grid through three separate wind projects. Together, these projects are expected to supply renewable energy to hundreds of stores, clubs and distribution facilities annually. That’s enough renewable energy to power over 240,000 average American homes for a year. That’s on top of the 4 gigawatts of renewable energy currently supplied by our projects globally. This is one more example of the important work we’re doing to become a regenerative company.

Now let’s talk more about our results for the quarter. Walmart US had another strong quarter. The team delivered for our customers as they shopped in our stores and online and additional government stimulus payments created a tailwind. Our comp sales of 6%, including 37% growth in e-commerce, were strong. Strength was broad based across categories, including apparel, home, hardlines and seasonal. I recently visited stores, clubs and supply chain facilities in New Jersey, Delaware, DC, Ohio, New Mexico, Texas, Illinois, California and Florida. I continue to be grateful for the job our associates are doing, and I’m impressed by their spirit. They’re operating safely in a pandemic, improving our in-stock and standards, working hard to fulfill pickup and delivery orders and vaccinating millions. Doing all those things at once isn’t easy, and we’ve had our challenges, but our associates continue to step up and they’re strengthening our position as they do it.

In the US, our first-party retail business is strong, but we’re also making good progress in other important parts of our business. Marketplace GMV, fulfillment services and advertising income with Walmart Connect are all strong. The flywheel we showed you in February is being built. Each component is positioning us to serve the customer better while diversifying the model. As we previously shared, the top of the flywheel starts with being the best first place people shop. Store remodels, investments in pickup and delivery capacity and sales of Walmart+ fall into this category of activities. We need more capacity to get ahead of demand, and we remain convinced these investments are smart ones. This is one of the keys to selling more Walmart+ memberships, which is an important piece of our strategy over time.

In addition to work at the top of the flywheel, we’ll continuously add brands, assortment and capabilities to our e-commerce general merchandise business with first-party inventory and marketplace expansion. We’ll invest in our general merchandise business and grow in higher-margin categories. The announced acquisition of Zeekit is a great example. This start-up combines fashion and technology through a dynamic virtual fitting room and underscores the desire to grow our apparel business aggressively. We continue our work to build a larger health and wellness business and help customers and associates have a better experience when it comes to their healthcare. Our acquisition of MeMD is a big step in that direction. Adding a telehealth capability was important.

Just as we’re doing with core retail, we’re building an omnichannel health and wellness business. At Sam’s Club, the momentum continues. Our items are improving, membership and sales comps are strong and the team keeps adding and scaling capabilities like curbside. We’re seeing strength in categories associated with social gatherings as well as an increase in business member activity. Categories like restaurant supplies are coming back. We saw a tremendous growth in membership income for the quarter, and overall, membership counts are at an all-time high. Like our source business, government stimulus helped our results, but I’m confident the underlying business is strong and moving in the right direction for our members.

Our international team has been busy transitioning the portfolio to higher growth markets, and it’s working. As you’ll recall, we recently divested our businesses in the UK, Japan and Argentina. And as a result, net sales for the quarter declined about 11% year-on-year. On a like-for-like basis, when we remove the recently divested markets, net sales increased 5.1%. These are good results and demonstrate the segment’s ability to deliver growth for the enterprise.

In India, for the first quarter, Flipkart and PhonePe continued to experience strong growth as annualized total payment value run rate at PhonePe grew by more than 150% versus last year. At Flipkart, monthly active customers and users are key metrics, and we’re performing well. Our recent announcement of our intent to acquire Cleartrip, a leading online travel company, underscores our commitment to transform the customer experience through digital commerce. A growing base of customers means we need to continue to add new capabilities, including areas such as logistics and data storage. The recently announced partnership with Adani Group will help us do just that.

WALMEX continues to be strong and the flywheel is coming to life. Our assets in this market uniquely position us to serve customers in new ways, and they’re responding. In Mexico, sales and e-commerce increased 166%, and our same-day delivery service is now available from 680 locations. Similar to the US, we’re expanding our business to include more than just traditional retail. A few areas of note include the advertising business, which saw an increase of more than 100% in new advertisers, and our new mobile phone services network that provides voice, data and home broadband, bringing access and value to our customers. We doubled the number of users of these services during the quarter as customers enjoy the convenience of adding data to their plan right at the checkout.

In China, our e-commerce business in Sam’s Club continue to resonate with customers and members. Helped by a strong Chinese New Year, the Club business delivered strong sales across all categories, leading to double-digit comp sales growth. We grew overall e-commerce sales 60% on top of the impressive growth last year. Results from our business in Canada were good even as lockdown measures intensified as the quarter progressed. We started with strong sales in stores and e-commerce, but COVID-19 related restrictions on sales of certain merchandise categories towards the end of the quarter pressured our performance. The underlying business is strong, and we’re confident in our omnichannel model for this market.

I’ll close today by thanking everyone for a strong quarter. It all starts with our associates and their focus on serving our customers and members. We’re being aggressive and dialing up innovation and speed. We’re moving fast to learn new skills and to sharpen our edge on existing ones. And we’ll move even faster as we invest in key areas to accelerate growth into the future. Thank you for your interest in our Company.

Now, I’ll turn it over to Brett.

Brett Biggs — Executive Vice President and Chief Financial Officer

Thanks, Doug.

We’re pleased with strong first quarter results and the continued momentum in the business, with both strong sales and profit growth. While stimulus spending benefited results, it’s exciting to see the continued progress in our underlying business as we execute on the fundamentals and progress with our omni strategy. Newer businesses within our ecosystem like advertising and fulfillment services are growing rapidly, helping margins and allowing us to continue to invest in other strategic priorities. Our unique assets, value proposition and financial strength put us in a great competitive position to win, keeping the customer at the center of all we do. As we expected, we’re growing grocery market share again in the US compared to last year, according to Nielsen. Value and assortment will continue to resonate with customers as does the convenience we provide with our omni shopping options.

Now let’s discuss Q1 results. As we’ve mentioned previously, the divestitures in the UK, Japan and Argentina significantly affect year-over-year comparisons. We outlined the anticipated effect of divestitures on key financial metrics when we provided guidance in February. So my comments today will focus on the underlying business, excluding the effect of divestitures.

Total constant currency revenue growth was strong, up 5.8% to more than $132 billion, with underlying business trends continuing to improve while stimulus spending benefited US sales even versus last year’s consumer stock-up phase and initial stimulus. Walmart US comp sales were stronger than expected, up 6% in the quarter and up 16% on a two year stack. Sam’s Club grew comp sales nearly 11%, excluding fuel and tobacco, and international sales growth was strong, increasing more than 5% in constant currency, with strength in India, Canada and China. Globally, e-commerce sales growth remains robust at more than 40%.

Gross profit margin increased 96 basis points, led by Walmart US, reflecting mix shifts due in part to stimulus spending, lower markdowns and lapping last year’s COVID related stock-up, which was more focused on food and consumables. As expected, SG&A expenses were pressured by increased wage and technology investments in the US, partially offset by lower COVID-related costs, resulting in 21 basis points of deleverage. Overall, though, I feel good about expense focus across the Company.

Operating income on a constant currency basis was up over 28%, and adjusted EPS of $1.69 was 43% higher than last year’s Q1 adjusted EPS. The divested businesses contributed $0.07 of EPS due to partial period ownership in the quarter. GAAP EPS was $0.97, which includes net losses on our equity investments as well as the incremental loss in international divestitures. Operating cash flow declined about $4 billion due primarily to inventory increases versus last year when in-stock levels were much lower due to stock-up shopping. We stepped up buybacks during the quarter with $2.8 billion of share repurchase. We continue to feel great about the value of the Company.

Now let’s discuss the quarterly results for each segment.

Walmart US had another strong quarter, aided by stimulus spending and underlying improvements in the grocery business as well as strength in reopening categories such as travel, celebration and personal care. We’re particularly encouraged by the improving trends in store transactions which turned solidly positive in April for the first time in a year. We also saw strong market share gains in grocery, according to Nielsen, and continued strength in e-commerce. Comp sales, excluding fuel, increased 6%, resulting in a strong two-year stack comp of 16%. Sales strength was broad based across channels, with e-commerce sales growth of 37%.

The omni strategy continues to resonate as customers utilize all the shopping options we offer and we continue to expand pickup and delivery capacity from stores. Customer trip consolidation led to nearly 10% increase in average basket size, with 3% fewer transactions. Strong sales trends were led by apparel, home and lawn and garden. Grocery sales declined against uniquely tough comparison, but comps were up low-double digits on a two-year stack basis, including mid-teens growth in food categories, helped by strong price positioning, improving in-stocks and expanded store hours relative to last year. We’re pleased with the progress of strategic growth initiatives such as Walmart Connect advertising, e-commerce marketplace and Walmart fulfillment services. Advertising revenue was robust with triple-digit growth for the quarter.

Gross profit rate was strong at more than 140 basis points, reflecting favorable mix shift to higher margin general merchandise categories and lower markdowns. Margins were also helped by lapping last year’s COVID related closures of vision centers and auto care centers. SG&A expenses deleveraged 49 basis points as increased associate wage investments and increased technology spend were partially offset by an approximate $400 million reduction in COVID related costs versus last year. Operating income was very strong, up nearly 27%.

Inventory increased 16%, reflecting strong sales growth and lapping last year’s COVID-related effects on inventory. We continue to monitor industry challenges related to transit and port delays, and our merchants have taken steps to mitigate the challenges, including adding extra lead time to orders. The fundamentals of the US business continue to improve, and we’re confident we have the strategy, structure and people in place to serve customers and reach our goals this year and beyond.

International delivered strong Q1 results with net sales growth of 5.1% in constant currency, including strength in India, Canada and China, despite many markets being negatively affected toward the end of the quarter by a resurgence of COVID. The benefit of strategic portfolio realignment to focus on higher growth markets is becoming more evident in top line growth. E-commerce sales increased approximately 64% and penetration grew more than 570 basis points to about 16% of sales. Currency benefited sales by approximately $0.7 billion.

Comp sales in Mexico declined slightly against a tough comparison but were up low-double digits on a two-year stack basis as the omnichannel strategy continues to accelerate. The Mexico business has made good progress expanding alternative revenue and profit streams within the ecosystem, including doubling the number of digital advertisers and continue to see strong growth in mobile services. Canada comps increased 3.4%, with more than 115% growth in e-commerce sales despite headwinds later in the quarter from COVID-related government restrictions on the sales of non-essential categories like apparel and general merchandise. China comps increased 1.3% and were up 13% on a two year stack. Strong Chinese New Year sales, continued strength of Sam’s Clubs and e-commerce growth of 60%, all contributed to the result. Flipkart continues to perform well, driving strong and sustainable e-commerce GMV growth and strong trends in monthly active customers and users even as the teams deal with the challenges of resurging COVID cases in India.

International operating income was strong, up more than 21% as better sales mix and fewer markdowns in certain markets benefited margins in addition to continued focus on expenses.

The momentum at Sam’s Club continued in the first quarter, with comp sales growth of 10.6%, excluding fuel and tobacco, due in part to stimulus spending. On a two-year stack basis, comps were up nearly 27%. Comps benefited from both increased ticket and transactions. Strength was broad based across categories, with home and apparel leading the way. E-commerce sales were strong, increasing 47%, led by strength in curbside pickup at the Club. We are pleased with the continued strong membership trends as membership income grew about 13%. We achieved a new high for overall membership counts during the quarter and saw higher renewal rates, including strong first-year renewals and rising + penetration. Operating income increased more than 16% in Q1, but including the negative impact of fuel, profit increased 33%.

Now let’s turn to guidance.

Our typical practice is to not update guidance until the second quarter release. But we’re in an unusual period where Q1 stimulus led to meaningful sales and profit tailwinds that weren’t contemplated when we provided guidance in February. The guidance discussed here assumes that COVID conditions continue to improve and there won’t be significant additional government stimulus packages for the remainder of the year. We now anticipate higher full year enterprise sales growth than originally projected, primarily due to the strong Q1 performance and our initial forecast for Q2. Excluding the impact of divestitures, consolidated net sales growth is now expected to be up low to mid-single digits versus our original guidance of low single-digit increase. We’re also raising full year guidance for operating income and EPS to reflect the strong performance in Q1 and our expectation for a potentially better second quarter than previously expected.

On a constant currency basis and excluding the impact of divestitures, we now expect full year consolidated operating income to increase by high-single digits for the year and EPS to increase by low-double digits, which is an increase from our prior guidance of both being flat to up slightly. Walmart US operating income is now expected to increase high single digits versus our original guidance of a slight increase. The second quarter has started off a bit better than originally anticipated as stimulus spending continues to benefit certain general merchandise categories, and we expect grocery market share gains to continue. We now anticipate Q2 EPS, excluding divestitures, will be up low-single digits and assumes a low single digit Walmart US comp sales increase, excluding fuel.

The COVID pandemic continues to create both tailwinds and headwinds for our business. While Q1 was aided by stimulus spending primarily in the US, certain international markets continue to be negatively affected by the resurgence in COVID cases and related government restrictions on operations, particularly in India and Canada. Given continued uncertainty, we’re maintaining our original guidance for the back half of the year, and we’ll update you as we gain clarity on key external variables related to the health crisis and their potential impact on our business and the global economy.

Again, I’m very pleased with the first quarter results and feel good about the underlying strength of the business.

Thank you for your time and interest this morning. And we’d be happy to take your questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question is from the line of Karen Short with Barclays. Please proceed with your question.

Karen Short — Barclays — Analyst

Hi. Thanks very much. I wanted to focus on grocery because you’ve obviously mentioned that a couple of times in this conference call and the presentation. But I guess what I’m wondering is, what is your approach to pricing given the price gaps that we’re seeing with conventional, and that, combined with the fact that we are seeing unprecedented cost inflation? And I guess maybe asking it a little differently, with respect to your broader goals for 2021, how important is recapturing share in grocery?

John Furner — President and Chief Executive Officer, Walmart U.S.

Hey, good morning. This is John Furner. Thanks for the question. First, let me just start by saying a big thank you to our associates and our team around the country who helped us deliver the quarter and on the heels of such an interesting year last year, they’ve done a great job improving conditions both in-store and online, and we’re really proud of the performance in food. I’m glad to start with that question.

Over the quarter, we’ve seen a lot of progress in food with our inventory, considering we started the quarter with a very large ice storm that affected supply chains, and then as we noted late in the quarter, performance that resulted in market share gains in food. There is a view of this that we showed back in February which is our flywheel. On the top of the flywheel is our food and consumable business and our Supercenter business, which is really important to the customer journey. And over the last 12 months — specifically on your question on price, over the last 12 months, we saw our price gaps improve versus the market, and our merchants are working hard to ensure that that will continue. These market share gains that we saw in the latter part of the quarter are very encouraging, and it’s great to see that we’re positioned well when customers need to shift. When customers shifted last year to shopping online, we’re able to perform at that time, and then we’ve seen some shift back in the store in the quarter, and the performance that’s representing the first quarter is a reflection of that. So we feel good about the price gaps. These are things that you always work on. Considering how many levers merchants have and everything going on in the market, we forget about our position in the market and we’ll continue to focus on share gains the rest of the year.

Karen Short — Barclays — Analyst

Thanks.

Operator

The next question is from the line of Paul Trussell with Deutsche Bank. Please proceed with your question.

Paul Trussell — Deutsche Bank — Analyst

Good morning. And strong results. Just wanted to dig a little bit more on your updated guidance for the year. Maybe if you can give a little bit of color as it relates to the improvement in your 2Q expectations and then just provide a little bit more context on how you’re thinking about first half versus second half of the year.

Brett Biggs — Executive Vice President and Chief Financial Officer

Hey, Paul. This is Brett. Good to hear from you. Yeah, I mean, we — as we got through the first quarter and we started — we started understanding how strong the underlying business is — as John said, it started out a little challenging with the weather we had in February, but we saw the business strengthening as we went through the quarter, and certainly some of that is going to be stimulus. We readily admit that. But you’re seeing customers get back out again. Because it feels like things are opening back up, particularly in certain parts of the country. So we felt like it was the right time to go ahead and update guidance, different than we typically do, given the strong performance and then what we’ve seen in the early parts of the second quarter, we felt that we should go ahead and update guidance as we did. We haven’t said anything really about the back half, as I said in my comments. Still a lot of uncertainties that are out there, with headwinds and tailwinds, and they’ll play themselves out over the next several months, but I think all of us feel more confident than we did in February and felt like updating guidance was the right thing to do at this point.

Doug McMillon — President and Chief Executive Officer

Paul, this is Doug. I would just add that when we imagine back to school, Halloween, Thanksgiving, Christmas and what families are going to want to do, we get really excited about the potential of that and are buying in a consistent way with how we are imagining it.

Paul Trussell — Deutsche Bank — Analyst

Thank you. And just a really quick follow-up just on the margins, just digging a little bit more in 1Q. Brett, could you talk a little bit more about what was the impact of the strategic wage and technology investments that you made?

Brett Biggs — Executive Vice President and Chief Financial Officer

Yeah. I mean, I’ll talk — I’ll start with gross margin. I mean, gross margins obviously were up significantly in the US, about 140 basis points. Really strong general merchandise sales this year. If you’re comparing that against the quarter last year, that was very heavily influenced by food and consumables. So you get that dynamic on gross margin. Certainly, the wage investments had an impact — I won’t get into the specifics of that. It did cause us — primarily caused us deleverage in the first quarter, but we knew that was — that was coming. We’re glad we did that and certainly ahead of the environment that you’re seeing right now: wage increases, tech investment increases as well. But it’s offset by some other things that we’re leveraging across the Company. Paul, I still feel good about the overall expense discipline and focus that I see across the Company. And as we said, when we get through this year, with the increased wage investments going forward, I still feel good about our ability to leverage long-term.

Paul Trussell — Deutsche Bank — Analyst

Thank you. Best of luck.

Operator

Our next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.

Simeon Gutman — Morgan Stanley — Analyst

Hi. Good morning, everyone. So I have maybe a two-part question, but I’ll make it one question. First, you referred, Doug and Brett, in the transcript, a lot of mentions of alternative profit streams or profit pools. Can you talk about your visibility around the business, and if these pools are giving you more confidence in sort of how you’re managing the business, it gives you more I guess wherewithal to invest back into it? And then the second part of the question is, Doug, you mentioned the flywheel and you’re investing in capacity ahead of growth. Any update on when there could be an inflection or is it rolling or does it start at some point in the next fiscal year where you had a good place and maybe push a little bit harder on Walmart+. Thank you.

Doug McMillon — President and Chief Executive Officer

Yeah. Simeon, this is Doug. I’ll go first. As it relates to alternative profit pools, John can chime in here as well. But I’m excited about marketplace. I’m excited about what’s happening with fulfillment services. Walmart Connect performance was good. We do have strong visibility into that. And you’re starting to see it happen in Mexico too. And as we’ve said to you before, this strategy makes sense for us everywhere in our key markets. So the P&L starting to change in shape as we described in February even more than a year ago, and that does give us some room.

John Furner — President and Chief Executive Officer, Walmart U.S.

Good morning, Simeon, this is John. I’ll just add on and say that we are excited about the three areas mentioned: Marketplace; WFS, Walmart Fulfillment Services; and Connect, like I said earlier. Really optimistic about the results with Walmart Connect with triple-digit growth. That platform is something that we’ve been working on for a while. And as we talked to you a few months ago, it helps connect buyers, sellers and suppliers in a way that’s unique to Walmart and optimistic about what we see there. On fulfillment services, it’s great to see the team expanding capacity. We now — we have seller demand. My team and I have spent a number of hours listening to sellers, talking to sellers and figuring out all the tools that we need to add. So this is important for their businesses as well. And then, as we said in the quarter, we had 37% growth in e-commerce on top of a big number of last year. We’ve basically doubled the business the last couple of years. So, excited about all three of those and they are clearly businesses that will help us with our flywheel going forward.

Doug McMillon — President and Chief Executive Officer

As it relates to capacity getting ahead of growth, it’s starting to happen. The plan that we had for the year is being executed. And as you’re in stores, you can see the stress that some of our stores are under in terms of the volume going through for pickup and delivery orders, and in some stores we’re expanding space. Capital is going towards that. In some stores, we’ll be putting in automation to really press the top end of this thing where we know we’re going to have that kind of demand and the team is executing against that and we continue, Simeon, to be excited about it. And we’ll go as fast as we can go this year and do it well, and I think we’ll learn a lot from it and we’re very confident that that capacity is going to be needed.

Simeon Gutman — Morgan Stanley — Analyst

Thanks. Best of luck.

Operator

Our next question is from the line of Bob Drbul with Guggenheim. Please proceed with your question.

Bob Drbul — Guggenheim — Analyst

Hey, good morning. Just a couple of questions. I mean, largely around gross margin and pricing and inflation, just wondered if you can talk a little bit about what you’re seeing on the inflationary side of different categories. And you did mention balancing between customers and shareholders. Just sort of how you’re approaching that. And sort of tying it together, when you look at the consumer focused more on value versus convenience, just wondered if you could maybe give us a few examples on where you think you’re making progress around that value offering in this environment. Thanks.

John Furner — President and Chief Executive Officer, Walmart U.S.

Yeah. Thanks for the question. This is John again. First, as we said, we’re really pleased with the performance in food, and the team has just done a great job getting the entire supply chain back in stock, including stores. We’ve got changes in the stores where we’re shifting more of our stocking to overnight so we can free up more capacity during the day for things like picking, as Doug said, and do that in a way that’s conducive to customer shopping. So excited to make those changes. As far as price gaps, we’ve always had a principle here that everyday low price is important. In the quarter, we had about 30% more rollbacks in stores than what we would have had a year ago. Some other things that are important are the mix — not only the mix of the entire box, but the mix within food.

I’m pleased with the share gains that happened in meat and produce and bakery. So even within the food categories, the mix has been favorable to categories that tend to have better margins, which is enabling us to maintain price positions that we’ve been running. And our gap expanded last year versus the market. We are pleased with the gap, we’re proud of the gap, and we’ll continue to use all the levers we can to maintain those kinds of price gaps. The merchants of Walmart this year even more prepared than years in the past to be able to manage that because of the channels they get. Our merchants across the business can manage the channels from stores to e-commerce first-party, e-commerce third party. And then finally, with the additional revenue and profit streams we mentioned with Walmart Connect, marketplace and fulfillment services, that will just help us going forward to make sure that we have the right gap for customers. I do agree with you that the value is — could be more important than convenience last year but value has been an important pillar of ours for a very long time.

Doug McMillon — President and Chief Executive Officer

This mentality that John described related to rollbacks is important. To underline, it applies in international, it applies in Sam’s Club as well. Bob, I’m reminded of a conversation in the early ’90s as an assistant buyer in food, my supervisor walked into the room with a few of us and said, we’re short on our profit number for the month. I need you all define price reductions that you can put in place quickly, bring them to me by the end of the day. And I thought I misheard him. How do you lower prices and increase profit. And that’s the beauty of retail and the mix in these Supercenters, and now with e-commerce and marketplace and fulfillment services and Walmart Connect, we’ve got all these levers to be able to find places to go upstream, do things differently than other people are doing it, sort of have 30% more rollbacks in place right now in Walmart US, for example, positions us really well.

Bob Drbul — Guggenheim — Analyst

Thank you.

Operator

Our next question is coming from the line of Kate McShane with Goldman Sachs. Please proceed with your question.

Kate McShane — Goldman Sachs — Analyst

Hi, thank you. Thanks for taking our question. I know that in-stocks was an area that you mentioned during 2020 that was hard to manage given the strong demand. Just wondered, currently, are there any areas within your inventory of categories that are light or you’re still working to build back?

John Furner — President and Chief Executive Officer, Walmart U.S.

Hey, good morning. Thanks for the question. Certainly, 2020 was a challenge when it comes to inventory flow with all the phases we went through from the stock-up phase to people moving into their home and then demand and supply chain challenges all across that were related to the pandemic. Early in the quarter, I felt like we were making pretty good progress, and then we had this ice storm where we had just the record number of locations closed for a few days which put some stress on the supply chain. And then as we got later into the quarter, certainly we see improvements in our food and consumable business compared to what they would have been a year ago. I mean, general merchandise has been a bit mixed. It’s better in many cases, but there are some pockets where we continue to chase demand, things like adult bicycles, some of our categories in consumer electronics. We’re monitoring things like delays at the ports and other factors in the supply chain. And we’ll watch all those things closely I think to continue to react, but definitely some pockets in general merchandise that we’re still chasing even as we speak today.

Kate McShane — Goldman Sachs — Analyst

Thank you.

Operator

Our next question is from the line of Peter Benedict with Baird. Please proceed with your question.

Peter Benedict — Robert W. Baird — Analyst

Hi. Good morning, guys. It’s a question on US e-commerce, maybe for John. Just — obviously, the pickup activity continues to scale. But just curious on the home delivery front, maybe what you’re pushing on there, just any updates. And also your micro or market fulfillment center tests. Just curious kind of how you’re — how you’re approaching that and just your thoughts on kind of the home delivery side of fulfillment of e-commerce. Thanks.

John Furner — President and Chief Executive Officer, Walmart U.S.

Sure, Peter. Thanks for the question. In general, we have been working on capacity improvements and capacity growth. When it comes to online pickup and delivery from stores, that’s something that we have been tackling for some time now. It accelerated last year, and we manage things, what we call things like slot utilization or available slots and we have more slots available for picking for schedule orders than we’ve ever had. We also have more capacity to ship from store, which leads to, I think the second part of your question, which is the in-home or the delivery at home. And I’ll say a couple of things there.

And number one, we are expanding our, what we call our Walmart in-home services which we just picked up another market, and that’s where deliver food and other items from stores all the way into the home, including in the refrigerator. We have our market fulfillment centers that you asked about. We have several that are in construction. We expect to be launching those other late Q2 early Q3, so we’ll be able to talk about that more once those launch. And then finally, we are excited about our last mile business. We’ve been operating our first delivery vans that are Walmart branded in the market here in Arkansas, and we’re learning a lot as we go forward. But we see lots of opportunities to serve customers, whether it’s in-store, it’s at their home or it’s at the curb and they want to do pickup. We want to be extremely flexible and be able to serve customers any way they want. Last year, there was such a shift of people that were wanting to have delivers shifted to home from shopping in store. I think what we’ll see more this year is a balance between the at-home deliveries, shopping in store and pick up as people get back out. As Brett alluded to earlier, that’s assuming that conditions with the pandemic continue to improve and we’ll be ready should these change in new directions.

Operator

Our next question is coming from the line of Michael Lasser with UBS. Please proceed with your question.

Michael Lasser — UBS — Analyst

Good morning. Thanks a lot for taking my question. Can you quantify to the comments that you made in the script? One was from Brett who noted that the guidance increase was mostly due to stimulus-related spending. So how do you parse out the 1Q results and what you’re expecting in 2Q the impacts from stimulus. And two, Doug noted that Walmart+ is an important driver over time. So can you give us a sense for where that program stands today and how it should unfold from here? Thank you so much.

Brett Biggs — Executive Vice President and Chief Financial Officer

Hey, Michael, it’s Brett. Good to hear from you. I mean, a couple of things I mentioned various ways in the script is the underlying business feels good and we’re more optimistic about that part of it. Certainly, stimulus benefited our results in the first quarter, but you can also get a sense of how we increased the second quarter. You know what the original guidance was and how we increased the guidance for that quarter. So that should give you a little bit of sense of how we’re thinking about stimulus versus the underlying business. I can tell you, though, it is challenging to pick out exactly the impacts of stimulus because of the types of categories that you see benefited by stimulus are also categories you see benefited by the economy opening up, particularly in the general merchandise side, so it makes it a little more challenging to pick through that.

Doug McMillon — President and Chief Executive Officer

Michael, on membership inside Walmart. This is a new program for us. The number one driver of selling memberships is the grocery, Supercenter, pickup and delivery. And as we said before, capacity is our issue there. And as we said in February, our focus is on the quality of that experience, not the quantity. We want some time to work on NPS, we want to build capacity. We are marketing the program, and long-term, it will be important to us. But we’ve got so many other things going on with stores improving and traffic and e-commerce growing and marketplace and all that kind of stuff, we don’t think that Walmart+ should be the primary focus at the moment for us with all these other opportunities. So we’ll keep growing it. At some point, I’m sure we’ll share some more information with you guys about it. I know there is a request for that because of streaming services and how much people are talking about subscriptions and memberships these days. So, John, I don’t know if you want to add anything, but that’s how I feel about it right now.

John Furner — President and Chief Executive Officer, Walmart U.S.

Yeah, I completely agree. And the big thing that we’re doing is creating capacity to be able to serve more, and we’ve begun work on market fulfillment centers where we can use locations as hubs for other stores and spokes. We’ve got a lot of really encouraging supply chain work going on that would help us use the right algorithms to be able to pull inventory from all across the network and be able to serve people. So encouraging just in the last few months to see that not only the capacity has gone up, but e-commerce results have been strong, delivery from stores has been strong, delivery from fulfillment centers has been strong. So these capabilities we’re putting in place will be a great foundation for this program just moving forward.

Doug McMillon — President and Chief Executive Officer

Having a digital relationship with customers is important, and that takes various forms. We’ve seen with the app downloads for example and app popularity, and what happened last year, in particular, with pickup and delivery, a really large expansion in the number of digital relationships which helps us with data, helps us be a retailer in the future. Overall, we feel good about what’s happening in those areas.

John Furner — President and Chief Executive Officer, Walmart U.S.

Yeah. Those relationships, I believe, will continue to grow because of things like the improvements in technology. We’re working on improving the app and its core experience. Acquisitions like Zeekit and MeMD are also other ways that customers will be able to connect with Walmart effectively and we’ll be able to help them with more and more of their life and take friction out, make things simple for them.

Michael Lasser — UBS — Analyst

Very helpful commentary. Thank you so much.

Operator

Our next question is from the line of Steph Wissink with Jefferies. Please proceed with your question.

Stephanie Wissink — Jefferies — Analyst

Thank you. Good morning, everyone. We had a question on general merchandise improvements. You’ve talked a lot about food, but I’d like to give you some time to talk about general merchandise, you’ve brought in new talent there, you’ve made some strategic tuck-in acquisitions and some strategic partnerships as well, to help us think about where we should be looking for in terms of progress on general merchandise. And maybe if you could tie that back to some of your initiatives around marketplace as well, what you’re learning from your digital growth that might be driving some of your in-store decisions around general merchandise. Thank you.

John Furner — President and Chief Executive Officer, Walmart U.S.

Sure. Let me take that. And this is John again. We’re really excited about the performance in general merchandise in the quarter. As you mentioned, we did make a number of changes with talent over the last year. The biggest change was last July when we pulled all of the channels together — and traditionally we had teams of people we called category specialists that were online, and then we had buyers that were in store and we’re referring to them all as merchants, because the merchants now have the customer relationship across all channels and the team has spent a lot of time thinking through and working on the right programs to determine what in our assortment goes in store, what’s 1P and then what’s 3:00 PM. I’ll give an example. Just last week, I was in Minneapolis visiting one of our suppliers, Nordic Ware, who makes cookware here in the United States, and we went through the number of items that they have in stores, what’s doing well, what’s going to improve, and then their entire catalog is available in the marketplace. And so our merchants are able to manage the assortment across channels, and that gives them more levers to be able to serve the customer in a way that’s frictionless and very clear.

But in the quarter, we definitely saw some changes with the way customers shop partly due to stimulus but also just behavior changes. Brett talked about it earlier, categories like personal care improving, travel starting to really kick back in. When you look at all the categories that are selling at Walmart, you can tell a lot about what’s going with customers across the country. So we definitely saw behaviors that are starting to reflect more opening up and getting back out and going to see people. Our health and wellness business has been extremely helpful in administering millions of vaccines in the quarter. And then with some of the changes even the last week, we expect that some of these changes with the customer could continue, but we’ll continue to watch that as the year moves on.

Operator

Thank you. Our next question is from the line of Edward Yruma with KeyBanc. Please proceed with your question.

Edward Yruma — KeyBanc Capital Markets — Analyst

Hey, thanks for taking the question. Obviously, some very positive commentary on store traffic. I know you noticed — you noted that April saw an inflection. When you see that store traffic begins to really improve, are you seeing any other changes within the e-com business, either pickup or delivery? And then as a follow-up, as that traffic improves, are you seeing any favorable mix shift? Thank you.

Doug McMillon — President and Chief Executive Officer

The traffic in store — the counter traffic, as we said, definitely change in April. Probably late March a bit. That’s when we started to cycle some of the really big stock-up trips and what was happening last year were fewer trips and big consolidation. It did put a lot of strain and stress on inventory and things like paper goods and food and consumables. So this year, as that shift begin to occur and we saw the share numbers begin to reflect gains in food categories, I think it was a combination of people getting back out, comparisons to last year, but also some normalization in terms of the frequency of food that’s purchased.

Specifically within channels, strong growth between all three. As we said in the US, the total comp was 6%, including e-commerce growth of 37%. And in e-commerce, growth is a mix of what’s being shipped to people’s homes from fulfillment centers or stores and inclusive of pickup. Finally, I’ll just say that we continue to expand capacity in all channels. We’re excited about the expansion of slots available for shopping in stores. We’re excited about the amount of capacity we have in stores to ship to people’s home, and then we’re continuing to work and invest in the supply chain and have more capacity going forward for pure first party e-commerce.

Operator

Thank you. Our next question is from the line of Michael Baker with D.A. Davidson. Please proceed with your questions.

Michael Baker — D.A. Davidson — Analyst

Thanks, guys. Just two follow-ups, if I could. One, the 100 basis point or so gross margin improvement, can you sort of parse that out and how much is coming just from the mix from general merchandise and how much is being supported by the strength in the alternative businesses and if not an exact quantification, maybe directionally. And then the second question, just to follow up on the comp guidance. So, first quarter was better than expected, second quarter guidance is up, yet the full year comp, if I’m understanding you correctly, didn’t change. So should we read into something, is that a decline in the back half or just too early to change it or low-single digits is a pretty wide range. I suppose it could be anywhere between 1% and 3% or 4%. So what do we read into that, not changing the full year guidance? Thank you.

Brett Biggs — Executive Vice President and Chief Financial Officer

Hey, this is Brett. I appreciate the question. Yeah, I think on the — I’ll start with the second one on comp guidance, what you said about low single digits being a fairly wide range. That is the case. It is a wide range, and it’s a — when you look at the big numbers of Walmart US, it ends up in a really wide range. So I wouldn’t read anything into that. We feel great about the first quarter and the second quarter started out pretty well, as we’ve said. On gross margin, I’ll just like start — John, you can comment. The biggest change of course was the general merchandise sales strength that we’re seeing this year versus the good consumable strength that we saw last year in the first quarter, and also when you start seeing strength in general merchandise, which we’ve had really over the last several quarters, you see fewer markdowns, there’s a lot of add-on benefits that come from that 4% [Phonetic] gross margin.

John Furner — President and Chief Executive Officer, Walmart U.S.

Yeah. Let me just add a bit on to the margin question. Certainly, there was strength in general merchandise in the quarter. We talked about the strength in food, and food was more balanced this year than what we would have seen last year. Last year, we were really heavy in dry grocery and stock-up items as the pandemic began. So the strength and share gains that we saw in the first quarter in food came most specifically meat, produce, bakery and grocery, but leading in the fresh areas is certainly helpful.

The third point I think I’d make is inventory positioning at the end of the quarter. Our inventory level is up, which is a good thing. Last year, we had big stock-outs in grocery and in general merchandise, so I feel much better about our inventory position. Brett — as Brett mentioned, our inventory is clean and we’ve been really disciplined about ensuring that we’re clearing up end-of-season and seasonal. So, we feel great there.

And then the last thing I would say is, the drivers of e-commerce contributed profit rates have been strong. Having merchants in the position of having all channels in their remit given the category and what the customer wants is helping with the drivers of e-commerce which would include things like contributed profit rates, Walmart Connect, etc.

Michael Baker — D.A. Davidson — Analyst

Great. Thank you. I appreciate that color.

Operator

Thank you. Our next question is from the line of Kelly Bania with BMO Capital. Please proceed with your question.

Kelly Bania — BMO Capital — Analyst

Hi, good morning. Thanks for taking our questions. I also wanted to touch a little bit on general merchandise. So with — in the US, so with low 20% growth, just curious if you think you gained market share there. We were thinking maybe 26% market growth, which is rough estimate. But just curious how you’re thinking about that, how you measure that and also how your efforts with Walmart fulfillment services and third-party are maybe contributing to your general merchandise growth.

John Furner — President and Chief Executive Officer, Walmart U.S.

This is John. Let me take your first question first. The share performance in general merchandise we think is about flat to last year, and we manage it a month in arrear, so our data is for February and March. So we feel good about the performance on through the first two-thirds of the quarter. Certainly saw, as you said, strength across general merchandise in the 20% range. So I think we’re positioned well. Feel good about where the share is versus a year ago. Particularly excited about performances in categories like home and apparel in the quarter and the positioning we have going into the second quarter. Certainly some tightness in the supply chain as we mentioned earlier in select categories where we’ve had high demand and stresses in the supply chain. But we’re watching that carefully and feel good about the improvements in in-stock all across the business, including the fulfillment centers and stores. But again, I think we’re most encouraged by the demand and seeing things like travel and other things open up and be able to be ready for customers is important as we move forward.

And then the second part of your question on fulfillment services. We’ve done a number of capacity improvements that are coming online this year. So we’re excited about the impact those will have not only on the top line and for the customer but also for our sellers. Our sellers are looking for more services and ability to ship, and it’s a great way to enable small businesses for growth. So, as the year goes on, we’ll see more and more capacity come online for our fulfillment service business.

Operator

Our next question is from the line of Scot Ciccarelli with RBC Capital Markets. Please proceed with your question.

Scot Ciccarelli — RBC Capital Markets — Analyst

Good morning, guys. My question is on the US EBIT increase that you saw. I’m wondering how much of that increase was attributable to what I would assume is a structurally more profitable e-commerce operation given the growth and scale you were able to garner last year. And related to that, any updated color regarding the profitability run rate of e-commerce today?

John Furner — President and Chief Executive Officer, Walmart U.S.

Good morning, Scot. This is John. Specifically on your question on e-com, we feel good about the drivers of the e-com profitability, which is contributed profit rates and that would be gross margins less the cost of shipping. We also feel good about the alternative revenue streams that are included in e-commerce, which are things like the marketplace, fulfillment services. Like I said earlier, we’re expanding capacity. We now have seller demand, and we’re really proud of the triple-digit growth in Walmart Connect. So all of those added together are helpful in the e-commerce P&L.

On the breakout, we actually are not breaking out the difference in stores and e-com because it has just become so blurred as we transition to an omni business. We have our merchants that are overseeing all channels by category. Stores are acting as stores, they act as pickup centers and in some cases fulfillment centers. We have fulfillment centers acting as fulfillment centers which go direct to home. And at times they ship to a store so they got — the inventory can be consolidated with an order and then put into our last mile network. So it’s just not possible for us to break those out given how blurred the lines have come. But overall, I’d say the team are doing — they’re just doing a great job with the contributed profit rates and the mix within — not only the mix within the business like general merchandise versus other things, but within categories they’re doing a great job improving contributed profit rates.

Scot Ciccarelli — RBC Capital Markets — Analyst

Very helpful. Thanks, guys.

Operator

Our next question is from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.

Chuck Grom — Gordon Haskett — Analyst

Hey, good morning and great quarter here. More of a macro question for me. When you look at the data and see how the consumer has allocated the most recent stimulus checks, I’m curious how they compare and contrast to what you saw in April and late December of this past year. Are they still spending the same amount? Or are we seeing more allocated to savings and therefore there’s some pent-up demand that could get spent in the coming months?

Brett Biggs — Executive Vice President and Chief Financial Officer

Hey Chuck, this is Brett. Yeah, I think we’re seeing a little bit of both. I mean, you’re seeing customers definitely get out and spend again. Spending rates are good. Income rates are good. But savings rates are actually still almost at an all-time high which would lead you to believe there is going to be some pent-up demand as we get to the back half of the year. So in a lot of ways, the consumer balance sheet, unless you’re in certain industries that were really impacted by COVID, the consumer balance sheet is about as strong as it’s been. Now a lot of that’s due to the stimulus the money that’s gone into the economy that way. But in either case it would indicate there’s some demand coming.

Operator

Our next question comes from the line of Robby Ohmes with Bank of America. Please proceed with your question.

Robby Ohmes — Bank of America — Analyst

Hey, good morning, guys. Doug, you mentioned the omnichannel health and wellness business. Can you remind us what that can ultimately look like? And maybe even what the current like pharmacy recovery, how that’s playing out? I know you guys have been involved with vaccines and everything. Anything going on that’s going to accelerate the omnichannel healthcare dream for you guys?

Doug McMillon — President and Chief Executive Officer

Yeah. Robby, I’ll jump in first and then John can add. I think the pharmacy business has performed really well considering everything our pharmacists have been doing. It’s been an incredible challenge to do everything that they’ve done since the pandemic started, including all of these vaccinations that they’re doing. We did have to shut down our vision centers for a while. Optical though is back open and that’s helped a lot. The ultimate destination does look like an omnichannel destination where we’d leverage those historical businesses together with new healthcare services and the digital front-end that John mentioned earlier and I mentioned in my remarks with MeMD. You can imagine a future where we’ll be able to reach customers on their devices in their homes to help them think about their healthcare in terms of what they eat, how much they move and then what types of healthcare services they need and where they get them.

And so, I think you can see us building together those capabilities that would help people have access to care more of an outcomes-based healthcare system, great value, accessibility and serve a lot of people that need to be served and also end up with a really good business that fits together well with a large food retailer. And so we’ve just been working through that strategy executing the pieces. And if you look back at the CareZone acquisition, this latest acquisition of MeMD, you can see us adding some capabilities in addition to those that we’re building on our own.

John Furner — President and Chief Executive Officer, Walmart U.S.

Yeah, and I would just add — go ahead.

Robby Ohmes — Bank of America — Analyst

I was just going to ask, is this something that longer-term fits in with Walmart+ as well.

Doug McMillon — President and Chief Executive Officer

We’ll get back to you on that, Robby.

John Furner — President and Chief Executive Officer, Walmart U.S.

Robby, this is John. I just want to reiterate excitement for the idea of an omnichannel healthcare solution for customers and Walmart together. Our pharmacists and our pharmacies have performed very well in the last year given all the challenges they’ve faced. They’ve opened up curbside delivery, delivery to home. We’ve got central fill pharmacies now helping assist with cost and efficiency and the service suite that they offer. It’s of course different by state, but the way our teams jumped in and found ways to help get the country vaccinated has been nothing short of amazing. I was in a store here locally last night and just seeing a number of people be able to walk up and get their vaccine is very encouraging.

And then, as Doug said, the market changed last year. We had opened a number of clinics and we continue to open clinics. We’re excited about the prospect that clinics bring. And then a large part of healthcare shifted to digital last year and the entire industry embraced that. So this acquisition of MeMD to enable relationships with customers on their device, in their home and be able to execute service care with our pharmacies and clinics on the backside of that is a really exciting prospect and it’s a big part of our flywheel going forward.

Operator

Thank you. At this time, we’ve reached the end of our question-and-answer session, and I’ll turn the floor back to Doug for closing remarks.

Doug McMillon — President and Chief Executive Officer

Just want to close by saying thank you to all of you for following the Company so closely. Hopefully, you can see that in addition to the US tailwind that we’ve got strength building in the Company. As I mentioned, I was in a lot of stores during this last quarter and standards are improving, in-stock’s improving against the challenges that obviously the pandemic brought. We’ve also got great momentum and strength in Sam’s Club. International had a really good quarter; one of the best quarters we’ve had in a while in International. And the portfolio work that Judith and the team have been doing there is working.

The situation with the virus in India is tragic and we’ll support not only our own folks, but the country as much as we can to try and get through that. And I’m sure there will be other hotspot cities and countries that we’ll deal with in the coming weeks because this pandemic is not over. But pandemic aside, economic stimulus aside, our focus is on the input metrics, the underlying fundamentals, the capabilities that we’re adding. And we see ourselves making real progress against those. The Company has changed a lot and there’s more change coming, and I’m grateful to the team and excited about the future. Thank you, all.

Operator

[Operator Closing Remarks]