Hey, everybody, welcome
to Quick Talk here on "The Huddle."
And I have Steve Schmitt with me.
Steve, I think you're going to
really enjoy getting to know.
Steve is our CFO in Walmart eCommerce,
and Steve's been in the
company, I guess, Steve,
a few years now, you've served
in three different roles,
the CFO of Walmart eCommerce.
Before that, you were
the CFO at Sam's Club
where we worked together the first time.
And then he joined investor relations,
which is a really interesting
field and fun, exciting,
and I'm sure you learned
a lot from that as well.
But before that,
Steve spent a number of
years with Yum! Brands
and then UPS earlier in his career,
which all leads back to the
town of Louisville, Kentucky.
So Steve, from Louisville,
a native of Louisville,
why don't you talk to us
first about what was it
like growing up in Kentucky
and then we'll come back
to the quarter you just had in eCommerce?
Thanks, John.
I really appreciate you having me.
It's been over four years
now here at Walmart,
which time flies for sure.
But, but you're right.
I was actually, originally
from Indianapolis,
but Kentucky's home. I
grew up in Louisville,
went to high school in
Louisville, big family,
four brothers, two sisters
all growing up in Kentucky.
So Kentucky will always
have a special place
in my heart for sure.
So, I stayed home and went to
the University of Louisville.
I think the plans growing
up were to be a pilot,
but somehow I convinced
myself to be an accountant,
go in to accounting instead,
which is about as different
as two things you could be,
but I went and studied
accounting and was really lucky.
I always had jobs growing up.
And fortunately for me,
I started working for UPS really
the second year of college.
And so, in some ways
I'd say I majored in UPS
and minored in accounting,
because I worked so much through school,
but it was great experience
there at Louisville.
It's always going to be home for sure.
Well, I was going to add
to the Louisville story.
I remember very distinctly in
Sam's one day I was sitting
at this table out in our work room,
and I see Steve walk into the office
with this big baseball bat
that said "Louisville Slugger."
And it's not every day
you see your CFO walk
into the office with a baseball bat.
I thought, "Well, this is
going to be interesting."
And then I figured out
what Steve was doing
because it's his home,
the Louisville Slugger,
he was handing out to people as a trophy,
as a signal of recognition for
people had done a great job,
but I never will forget that.
And it branded in my head,
Steve Schmitt and Louisville
stuck together, forever.
So, only question from me,
where you grew up, but I'm sure growing up
in that part of Kentucky was a lot of fun.
It's great city. It's a beautiful place.
And a lot of businesses there, right?
With UPS to begin with.
And I'd love to hear you talk
about your time at Yum! as well.
Yeah, actually at Yum! Brands,
a big part of the culture
at Yum! is recognition.
And so, I kind of stole what
I really liked about Yum!
when I came to Walmart and
created that recognition award,
which is the Louisville Slugger.
It's certainly personal for
me, because Louisville is home.
And I think people get a kick out of it,
because I put their name on the bat.
Louisville Slugger does a
nice job engraving the bats.
And we called it the Sam's Club Slugger
when I was at Sam's Club.
Now it's the Walmart
U.S. eCommerce Slugger.
And so, people have it.
And it's really cool when
you walk by their desks
and see them display it.
They're really proud of it.
I think a lot of times we underestimate
just the power of recognition,
and that's just kind of
a personal touch for me.
But look, I worked at UPS for 13 years.
You know, I started in my
second year of college.
Towards the end of college,
I was working second shift full-time
and going to school full-time
and studying on the weekends.
But it was great,
because I got to really
kind of kickstart my career
while I was in school, really,
for UPS and then fast forward
the clock 13 years later.
And I'd probably had 10 jobs in 13 years.
Probably like most people,
you figure you're going to retire there.
And you know, I had a friend of mine
that convinced me to talk to
some people at Yum! Brands,
which is also a Louisville-based company.
And at that time, I thought maybe
from a personal development standpoint,
it would be a better
move for me to change.
And so, I made the tough
decision to leave UPS
and work for Yum! Brands.
And I'd say probably for two years,
I actually felt guilty for leaving.
I was just so loyal to the company.
It's so good to me and gave
me so many opportunities,
paid for my school,
paid for my grad school.
So, I made the change to Yum! Brands.
I started off working in finance
and then had a job working really
with the finance marketing
mix, which was really cool.
I got to learn a lot about
marketing, television marketing.
At that time, there really
wasn't digital marketing.
The power of marketing,
building marketing calendars
to optimizing sales
and profits. I did that for a while
and then got an opportunity
to move into operations,
which was one of the biggest
breaks I got in my career
for a finance person
to actually be trusted
to run operations,
and at that time, it's a
very franchise business.
So, I was really looking
after about 1,000 restaurants
in 13 States,
learned a ton about
leadership, a ton about people,
a ton about operations
and did that for a year and a half
and then came back into
finance to do the investor gig.
So, wound up doing that, working
in strategy, and you know,
before I knew it, it was
a decade at Yum! Brands.
And then, and then I
got a call from Walmart.
So yeah,
I was really fortunate to work
for two really good companies
before coming to Walmart.
Yeah, well, a wild variety from
I want to be a pilot
to being an accountant
to running basically docks at UPS
and night in schools and restaurants.
And here you are.
Well, you guys yesterday
in the announcement
or our release had a 97% growth rate
for the quarter, which is fantastic.
I was telling Marc Lore last night,
I feel like I should have
bought something extra,
maybe just for the month
and to try to help get to 100.
100 would have been an
easier number to say.
We could say we just doubled it.
But you know, all joking aside,
97% is a fantastic result and quarter.
And there's a lot of people
who are behind that number.
So those things don't just happen,
but I'd love to hear about the quarter
and the way the P and L turned out.
Yeah, I'm really happy
with the second quarter,
really the first half of the year,
but more importantly,
how the model's evolving.
You know, we talk about building
really sustainable business,
building a healthier business,
and so far through the
first half of the year,
I'm really happy with our progress.
The customers want it.
They want to receive goods multiple ways.
And one of the strengths
of Walmart overall,
the towering strengths of
Walmart, is our ability
to give product and serve our customers
in ways that other companies can't.
And so, we're seeing the
eCommerce business accelerate.
We're seeing the stores business
have a fantastic quarter.
You know, it's always great
to see Sam's Club have a great quarter.
So the U.S. business has done really well,
and we're strengthening our position,
which to me, more than any quarter,
I don't get too worked up
in quarters, quite frankly.
I just look at how the
business model is evolving.
And I think it's evolving in a way that's
getting stronger.
And that's what gives me the most comfort.
Yeah, I agree with you,
because it was a combination of leverage,
and in any business when revenue grows,
your fixed costs are relatively flat.
Then the percentage of your sales
that fixed cost represents goes down,
and when you double it
then roughly that cuts it in half.
What we call contributed
profit rates are improving,
better mix, we're selling
more home and apparel
in addition to the growth
in the base categories,
and our marketplace business is growing.
We've got a number of new
sellers who have gotten
on the site and having a great experience.
So, it's combination of
mixed sales and leverage,
a really good way to get there.
At times, businesses can have
good quarters or bad quarters,
because of what we refer
to as one-time events.
But this was a much more solid
number all the way around,
and you and your team
should be proud of it.
A few years ago, if we'd
talked about eCommerce,
we meant buying something at Walmart.com
and then having it shipped to you,
and that was the end of it.
But today, when we say eCommerce,
it includes a lot more
than just Walmart.com
and the direct-to-home business.
Now there are a number of
ways customers can buy,
whether it's picking up in a store
or having something
shipped from the store,
fulfillment center, combination of both,
but you talked about the customer options
and the complexity of
what's in the background
that you may not recognize if you're just,
if you're just buying from,
something from the company.
Yeah. It's options, right?
We give the customer lots of options,
and at some point, John,
it's going to be difficult
to determine what's eCommerce
and what's not, just because
of how customers order,
where they pick it up, where they get it.
Our business model
continues to evolve so much
that we're making it so easy for customers
to interact with us
that it's just going to,
the lines are going to
continue to be blurred.
But it's just options,
and customers want options.
If we don't give them to
them, someone else will.
And fortunately, one of the
towering strengths of Walmart is
to have the capital strength
to be able to invest
in ways to continue to improve
the customer experience.
And so, we're executing
some businesses really well.
We're learning a lot about
others and learning as we go.
And that's what's exciting
about our business is we're
going to take some swings.
Some will work. Some won't.
But we'll continue to put
the customer at the center
and evolve for the customer.
Yeah and customers,
I try to break down things in three,
and customers want to
do one of three things,
buy something, pick something
up or have it delivered.
And behind that, all
the different ways that
that needs to happen, that's on us.
We've got to figure it out,
and we'll continue to innovate,
but there are some great
innovations this year.
Express delivery just
started a few months back,
and that's going really well.
It's in 2,000 stores,
express delivery, and in most cases,
you're getting the
delivery in about an hour.
We say under two, but
most cases about an hour,
I've seen some that have
made it in 14 minutes
from the time the customer
ordered till it's at the door
where things are just timed perfectly.
So, that's been an exciting innovation.
We've taken, there are two applications,
our grocery app and our
blue app, our Walmart app,
and combined them into one.
A lot more work to do there.
But those things are all good to see.
And on behalf of the
customer, hopefully over time,
they'll see that things can
become more and more simple,
where you just decide I'm going to buy it.
I'm going to pick it up or I'm
going to have it delivered.
And that's as much as they
need to think about it.
You know, it seems like some meetings
we're talking about it,
at literally a month from that meeting,
it's live and it's starting to scale.
And it's really impressive
to see how fast we're moving
in a lot of those initiatives.
Yeah, the customer market has changed.
The speed at which customers is changing,
and therefore, we've got to
stay at least at their pace
or ahead of it, or
they'll leave us behind,
so, we've gotta be really
hungry and stay ahead of it.
I was thinking about, Steve,
time at Sam's Club,
reflecting on your stage
presentation with Rob Gronkowski.
That was fun,
but I did enjoy seeing you there.
And you're about the same size roughly,
other than he's a foot taller than you.
Yeah, that was great.
That was great. I loved it.
I was preparing for the presentation
and was probably a little naive that
I gave a finance presentation,
and before I got to
interview Rob Gronkowski,
and I should have known
that my presentation really
was totally meaningless,
because once we called
Rob Gronkowski on stage,
everything else, I'm
sure, it was forgotten,
but he was a great sport.
You know, it's interesting
in reading about him a little bit,
he and I both had four
brothers growing up, and
looking at the pictures on stage,
it was pretty interesting
to see the two of us next
to each other, for sure.
Yeah. All about perspective.
But what you've done
this last couple of years
has made a big difference.
And one of the things I
learned from you early
when we were working together,
you were still an IR,
and I was in Sam's is
how to just make sure
when you're communicating
and you do this well,
is just make sure there's a decent balance
of hope and reality.
Make sure that people know the things,
that teams are doing well,
recognize people. People need recognition,
and nobody comes in and does
this all just for a paycheck.
They're doing it, because they
want to make a difference.
And it's important that people know
that they did make a difference.
And then the reality is,
there's always more to do.
And in retail it's a high transaction
and a low margin business.
So, it's mostly imperfect
just the way it works out.
And for us, we've got to get up every day
and try to beat what we did the day before
and make sure that the
work we're doing is making
a difference to the customer.
It was a good time at Sam's.
Sam's has had some momentum
the last several years,
and they've really picked it up this year.
So, big congratulations to them.
Yeah. You mention it John.
You know, in terms of recognition,
we've got a lot of people
making a difference.
You know, I talk to my team all the time,
just in what we're doing in
our part of the business.
And I've never seen people just
making so much of an impact
on the business in so
quick amount of time.
Great people. Recognizing
them is fun, right?
That's one of the fun things
that a leader gets to do.
And, you know, getting back to your point
about communications is,
especially when you're going
through difficult times,
I've always thought, you
know, be candid with people,
which is the defined reality piece
and then give hope on how we get out of it
and how we make the business stronger,
how we make their jobs stronger.
And the people today
in our business are
making such a difference.
I see it every day.
It's really exciting to
be part of a great team.
Very good,
and congratulations. It's
showing in the results, and
Steve, I appreciate what you're
doing and the whole team.
Thanks for coming on.
I'll talk to you later.
Thanks for having me. I appreciate it.
