The Amazon logo is displayed outside of an Amazon Fresh grocery store in Torrance, California on ... More July 29, 2025. Amazon.com, Inc. is scheduled to release earnings on July 31. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images) AFP via Getty Images MORE FOR YOU That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since ...

Core Insights - Amazon is reorganizing Whole Foods to integrate it more closely with its grocery business under new leadership, aiming to revitalize its grocery strategy [1][3] - The restructuring includes a new leadership team and aligning Whole Foods corporate staff with Amazon's employee programs, which will be implemented over the next 12 months [2][12] Business Strategy - The previous structure was criticized for not leveraging the full potential of Amazon's resources and talent, leading to inefficiencies and missed opportunities [3][11] - The new approach aims to streamline operations and create a unified employee experience to drive faster growth [11][13] Market Position - Despite a 40% sales growth since the acquisition in 2017, Amazon and Whole Foods hold only 1.4% and 1.6% of the US grocery market, respectively, significantly trailing behind competitors like Walmart and Kroger [4][9] - Amazon's grocery sales from physical stores reached $5.5 billion in the first quarter, with online grocery sales growing 10.1% last year, down from 20.6% the previous year [10] Leadership Changes - Jason Buechel, who became Whole Foods CEO in 2022, is now overseeing all of Amazon's grocery business and has introduced a new leadership team to refine the company's structure [6][14] - The new leadership team includes executives from both Whole Foods and Amazon, tasked with defining the new operational framework [14][15] Financial Adjustments - As part of the transition, Whole Foods will adopt Amazon's compensation model, although overall pay is expected to remain largely unchanged [12] - The company is looking to cut costs and has not committed to maintaining employee discounts during the transition [17][18]

Core Insights - Amazon's retail business is maintaining a flat hiring budget for 2024, focusing on operating expenses rather than headcount targets [1][2][5] - The changes apply only to corporate employees in the retail division, excluding warehouse and Amazon Web Services staff [3] - CEO Andy Jassy's strategy emphasizes efficiency and profit margins, with a reported record profit of $59 billion in 2024, nearly double that of 2023 [6][5] Hiring Strategy - The hiring budget will be scrutinized, requiring strong justification for any increases, shifting focus from headcount to operating expenses [2][7] - This approach allows for tighter financial control and encourages managers to be more flexible with compensation expenses [7][12] - Managers can hire high-cost talent without the pressure of headcount limits, potentially leading to leaner teams [12][13] Cost-Cutting Measures - Amazon has been on a cost-cutting spree, reducing its workforce from a peak of 1.6 million to 1.55 million, with at least 27,000 job cuts since late 2022 [11] - The retail division is expected to continue cost reductions into 2025 to support investments in new business ventures [14] - New financial reporting tools have been implemented to track headcount and operating expenses more effectively [10]

Core Viewpoint - Walmart has demonstrated strong performance in the retail sector, with significant growth in e-commerce and a focus on value, making it an attractive option for investors despite a slowdown in overall growth [1][10][15]. Group 1: Performance Metrics - Walmart's stock increased by 71.9% last year, outperforming the S&P 500 and the Dow Jones Industrial Average [1]. - Year-to-date, Walmart has achieved a 6.7% gain, contrasting with a 2.1% decline in the S&P 500 [1]. - In the first quarter of fiscal 2026, Walmart's global e-commerce sales grew by 22%, while total constant currency revenue grew by 4% [4]. Group 2: E-commerce and Business Strategy - Walmart's comparable sales in the U.S. grew by 4.5%, with 350 basis points attributed to e-commerce [5]. - The company has successfully improved e-commerce profitability for the first time in Q1, indicating a positive shift in its business model [9]. - Walmart's delivery options have expanded significantly, with U.S. deliveries in less than three hours growing by 91% year-over-year [9]. Group 3: Competitive Positioning - Walmart's value-focused strategy allows it to leverage its extensive store network and supply chain to compete effectively with Amazon on pricing [8]. - The company is positioned well to attract cost-conscious consumers amid inflation and economic uncertainty [4][6]. - Walmart's emphasis on efficiency and cost management is crucial for maintaining competitiveness against digitally native retailers like Amazon [7]. Group 4: Growth Outlook and Valuation - Walmart's forecast for fiscal 2026 indicates a 4% increase in net sales and a less than 2% increase in adjusted earnings per share, reflecting a slowdown in growth [12]. - The company's price-to-earnings (P/E) ratio stands at 41.2, suggesting that the stock is priced for high growth despite slower overall business growth [13][16]. - The low dividend yield of 1% may deter new investors, as the stock price has risen faster than the dividend [15].

Financial Data and Key Metrics Changes - In 2024, the company's net sales reached $638 billion, an increase of $63 billion year over year, representing an 11% growth [56] - Operating income for 2024 was reported at $68.6 billion, showing substantial improvements in profitability compared to previous years [60] - Free cash flow improved to $38 billion, an increase of over $1 billion year over year, driven by a rise in operating cash flow [62] Business Line Data and Key Metrics Changes - North America segment sales grew to $387 billion, up 10% year over year [57] - International segment sales reached $143 billion, also up 10% year over year, excluding foreign exchange impacts [57] - Advertising services generated $56 billion in net sales for 2024, marking a 20% increase year over year [59] Market Data and Key Metrics Changes - The company expanded its same-day delivery sites by over 60% in 2024, now serving more than 140 metro areas [55] - Third-party sellers accounted for 61% of all units sold on Amazon, the highest annual seller percentage mix ever recorded [58] Company Strategy and Development Direction - The company aims to be Earth's most customer-centric company, focusing on improving customer experiences through technology and innovation [49] - Significant investments are being made in generative AI, with over 1,000 applications being developed to enhance customer interactions and operational efficiency [71] - The company is expanding its grocery business, with over $100 billion in gross sales from center aisle items, excluding Whole Foods Market and Amazon Fresh [91] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the grocery sector, highlighting growth in Whole Foods Market and new store formats [92] - The company is committed to improving warehouse safety, reporting a 34% improvement in the recordable incident rate over the last five years [96] - Management emphasized the importance of maintaining low prices and broad selection amidst changing tariff policies, noting no significant demand reduction [88] Other Important Information - The company invested approximately $78 billion in cash CapEx in 2024, primarily for technology infrastructure and generative AI services [62] - The company has made substantial progress in profitability, returning to levels seen in 2020 and 2021 after a challenging 2022 [60] Q&A Session Summary Question: Can you respond to reports that Amazon is reducing AI investment and explain how AI is tangibly benefiting the company? - Management confirmed there are no plans to reduce AI investment and highlighted benefits in cost avoidance and productivity through generative AI applications [76][77] Question: How does Alexa Plus use AI? - Alexa Plus utilizes AI for automatic speech recognition, natural language understanding, and improved query handling, enabling it to perform actions for users [83] Question: What are the implications of the government's new tariff policies on Amazon? - Management noted uncertainty regarding tariff outcomes but emphasized efforts to maintain low prices and a diverse marketplace to mitigate impacts [87] Question: Do you still see the opportunity in grocery? - Management expressed bullishness about the grocery business, citing significant sales and growth potential in various formats [90] Question: What improvements is Amazon making in warehouse working conditions? - Management reported a 34% improvement in the recordable incident rate and highlighted initiatives to enhance workplace safety and ergonomics [96]