Walmart (WMT) stock reaches a record high intraday on Tuesday after the retailer reported better-than-expected fourth-quarter earnings results. E-commerce sales jumped 23% year-over-year, beating estimates on both revenue and earnings year-over-year. Walmart CFO John David Rainey joins Yahoo Finance Live to discuss the drivers behind the strong performance.

Rainey says holiday spending fueled sales, with "the two biggest sales days" occurring right before Christmas. Over the quarter, Walmart "gained share in almost every category," showing customers are increasingly shopping at Walmart as the company enhances how it serves them.

Another headline for the big-box chain is its plans to acquire TV manufacturer Vizio (VZIO) for $2.3 billion, after Walmart's "fast-growing, high margin" advertising business grew by 33% in the past quarter. Rainey explains the deal will allow Walmart to "connect and serve customers in different ways" by leveraging data to improve experiences.

While consumers show discretion around bigger purchases, Rainey says Walmart's "omnichannel retail model" with robust in-store and online distribution "is really resonating with customers" as they shop more frequently. As inflation persists, Walmart wants to provide value through lower prices, working with suppliers, and fine-tuning its own personal brands. However, Rainey notes "it's hard to generalize" where price pressures occur across categories.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: Walmart strong holiday showing pushing its global e-commerce sales up 23% from a year ago to over a hundred billion in 2023. The retail giant also doubling down on advertising, buying VIZIO here for $2.3 billion. Let's talk all about that and more with John David Rainey. He's Walmart's CFO joining us now alongside Yahoo Finance's executive editor, Brian Sozzi.

John David, it's great to have you here. Thanks so much for joining us this morning. A very strong quarter to say the least from Walmart. You've got your stock hitting a record high today. Talk to us just about what you're seeing consumer spending wise and some of the trends that you're noticing here in the early months of 2024.

JOHN DAVID RAINEY: Well, good morning. It's good to be on the show. We're really pleased to have announced a really strong fourth quarter earlier this morning. We grew our top line almost 6%, but I think importantly, grew operating income 13%, which is really strong and shows the core earnings power of our new model.

Through the holiday season, we saw that we-- customers certainly are coming to Walmart, shopping us more. We gained share, and we were pleased with what we saw overall. In fact, our two largest sales days ever were in the week before Christmas. We continue to see some strength through January and overall, when we look at the quarter, we've gained share in almost every category.

So customers are shopping Walmart, and we're getting better at how we serve them.

BRIAN SOZZI: John David, Brian here. Always-- always nice to see you. Let me just swipe the earnings results to the side for a second. I want to get into this VIZIO deal. Now you are no stranger to making big deals. You did a lot of this stuff when you were over at PayPal.

Is the real magic, or the real value in this $2.3 billion deal in the access to the customer data that Walmart gets?

JOHN DAVID RAINEY: Well, Brian, it's good to speak with you. Let me start with advertising broadly. Advertising grew 33% for us the most recent quarter. This is a fast growing high margin part of our business and what this deal with VIZIO does, it's very complementary to what we were doing organically.

It allows us to use their operating system to connect and served with customers in different ways, to provide a new channel to actually provide better service to our customers and connect with them through data.

BRIAN SOZZI: John David, let me just stay on this one. Do you expect the regulatory vigilance to be even just tougher for a deal like this given you are getting so much access to data?

JOHN DAVID RAINEY: Well, we operate in a complex and highly regulated environment in a lot of what we do. We think this deal makes eminent sense, and it ultimately allows us to better serve our customers, which we're looking forward to.

BRIAN SOZZI: John David, you think about the mindset of the consumer and the read through that you're getting to the consumer from this earnings period and what that spells out about how they are also kind of continuing to engage with Walmart versus some of your competitors, what would that read through be?

JOHN DAVID RAINEY: Well, it's been pretty consistent, Brad. We've seen that customers are continuing to be choiceful, they're using discretion with some of these larger ticket items. And when we look at the composition of the basket of when they're shopping with us, they're putting fewer items in that basket, but they're actually shopping with us more frequently.

And we see that we're gaining share relative to others, which I think illustrates that this omnichannel retail model that we have that has a strong physical footprint, but also a growing and thriving e-commerce arm to it is really resonating with customers.

SEANA SMITH: John David, when you take a look at the fact that we are starting to see and have started to see inflationary pressures begin to abate just a bit, if we do see more of this deflationary trend take hold, what exactly this means for Walmart and ultimately, demand that you expect to see from the consumer in the longer run?

JOHN DAVID RAINEY: Well, prices have come down. We've seen certain categories like general merchandise, as an example, that is deflationary right now. Prices are lower year over year. There are other categories, food and consumables, where we still see low single digit inflation.

Fundamentally, though, we want lower prices for our customers, and we're trying to do that working with our suppliers even focusing on our own private brand. Prices are still high relative to where they were a couple of years ago, but it's interesting because it's difficult to generalize right now about where some of these price pressures are.

If you take a category like pet, as an example, pet food is actually much higher year over year, but pet supplies is actually much lower. So it's a bit of a mixed bag as we look out over the coming quarters, but pricings-- prices are still high for customers.

BRIAN SOZZI: This has been a really impactful few weeks for Walmart in the lead up to this earnings. Of course, store managers getting higher starting pay. You have the stock options up to $20,000 for store managers. That is big stuff. Zooming out, do you think Walmart is just going through a cultural reset?

JOHN DAVID RAINEY: You might call it that, Brian. It's an interesting characterization of it. Look, I think fundamentally for us, we want to continue to invest in our associates. Fortunately for us, we have the margin profile as a company right now where we can still do that, invest in our associates, but also see our operating income grow faster over time.

I think a consistent theme through my two and a half decades of work is that when we get the operators of our business, the frontline to act like owners, that's a very good thing for shareholders as well. So we're very happy to allow our store managers to participate through share ownership with the stock grant.

BRIAN SOZZI: I just want to go back to that VIZIO deal, John David, quickly. So I was thinking back to when Walmart signed this deal with Paramount. So if you're a Walmart Plus member, you gain access to Paramount. It really is a pretty sweet deal. Does Walmart have any more ambitions to get into the media space because from the outside looking in, I see what Walmart's doing.

I see what Amazon's doing, I see what's Google doing, and there's a major recasting going on in the media landscape led by some very large companies.

JOHN DAVID RAINEY: Yeah, well, that's arguably a Red Sea of competition, and I'm not sure that that's really what we need to be focused on. I think we can provide better value to our customers by focusing on some of the basics that they expect from us.

We still need to improve with our delivery, with our e-commerce capabilities, and we know that we've got to plan around that, and we're excited about the improvements we've made over the last couple of years. But we want to focus on the basics while providing amenities to our customers that they'll pay for and that they value over time.

The Walmart Plus subscription right now is of great value, and we see a lot of the newer customers that are coming to us, particularly through this higher income demographic, are signing up through this channel so it's an exciting part of our business.

BRAD SMITH: John David, just lastly while we have here. I'm a little upset that I go on the website, you're sold out of some of the classic Reebok shoes, and we're coming off of All-Star weekend for the NBA. There's been a lot of fanfare around what Reebok, what Shaq, what they've been able to do in terms of making sure that some of that apparel, that footwear is more affordable for people coming into Walmart here.

But you think about some of the home grown brands that you've been extremely successful with as well, you know, where do you prioritize making sure that you're getting in some of these household name brands versus where you're actually spending more to make sure that you've got specific homegrown brands in categories that are doing successful?

JOHN DAVID RAINEY: It's a balance. We want to always provide national brands for our customers because that's what they want to buy, but at the same point in time as we talk about higher prices, giving them an option to use our private brand, our own brands is really important to them.

These private brands can be 10% to 30% less expensive than national brands, and as consumers are pinching-- as their dollar is going less far right now with higher inflation, that's important to them. And private brands is a big part of our business and Walmart US, it represents over 20% of our business.

For Sam's, it's over 30%. So this is a nice compliment to the national brand assortment that we offer for our customers.

BRAD SMITH: All right. I'm going to keep--

JOHN DAVID RAINEY: --try to make sure that we have those Reeboks for you.

BRAD SMITH: Look, I'm just sitting here hitting refresh. Refresh is my favorite button right now. We'll see if they come back at least within the next few minutes. Walmart CFO, John David Rainey, thanks so much for taking this-- taking the time here with us today.

We always appreciate it and Yahoo Finance's own Brian Sozzi.

JOHN DAVID RAINEY: Good talking to

BRAD SMITH: Likewise.