John David Rainey
Executive Vice President and Chief Financial Officer at Walmart
Well, we look forward to that, Doug. I hope the Razorbacks have a good season, just not as good as the Bears. I want to start by thanking our team for delivering another strong quarter. We're encouraged by the steady momentum building across the business. Importantly, the drivers of our outperformance are similar to the past several quarters. With customers and members continuing to respond to our value proposition as we provide lower prices and greater levels of convenience. We're broadening our assortment, improving customer experience, and earning their trust while seeing share gains as a result. We're also realizing benefits from the investments we've made in our core omni-retail business and seeing improved profitability with newer businesses. We're executing on our strategy and the business model is delivering as it's designed to do with operating income growing faster than sales and yet there is much more opportunity ahead.
As Doug noted, the hurricanes that impacted the Southeastern United States resulted in unanticipated expenses during the quarter. I'm incredibly proud of how our team responded to support the communities that we serve, using our fleet of semi trucks, supply chain, logistics capabilities, product inventory, and financial resources to support the restoration effort. At the peak of the storms, we had about 400 stores, clubs, and DCs closed. We're pleased that all of our associates in the affected areas remain safe and we continue to support them during this disruptive period. We've since reopened all of our supercenters except for two that were extensively damaged and we're in the process of restoring these stores to serve customers again as soon as possible.
Now let me review the highlights of our financial results. Q3 sales, operating income, and EPS all exceeded the top end of our guided ranges. Enterprise net sales growth was over 6% on a constant currency basis, with all three operating segments outperforming our expectations, aided by strong e-commerce growth. Walmart US comp sales increased 5.3%, including e-commerce sales growth of 22%. Growth in customer transactions and units across stores and e-commerce remained strong. Store-fulfilled delivery increased nearly 50% and surpassed $2.5 billion monthly run rate. We've now had 12 consecutive months of deliveries above $2 billion.
Food categories were especially strong this quarter with unit volumes growing by the highest level in four years. We also generated mid-teens growth in health and wellness due largely to branded pharmacy scripts, including GLP-1. GLP-1 sales contributed about one point to the segment comp while continuing to create mix pressures in gross profit. We're encouraged by the improvement in general merchandise, we had low single-digit-comp sales growth, including strength in home, hardline, and toys.
US customers remain resilient with behaviors largely consistent over the past four to six quarters. They continue to seek value to maximize their budgets, while also choosing convenient options to save time. Our efforts to bring down pricing have helped as total like-for-like inflation has remained close to flat for the past four quarters with Q3 general merchandise and consumables deflationary and food inflationary in the low single digits. We're seeing higher engagement across income cohorts with upper-income households continuing to account for the majority of our share gains.
Our international business had another strong quarter with constant currency sales growth of 12.4%, reflecting strength in Flipkart, Walmex, and China. We saw positive unit growth across markets with sales strength in both general merchandise and food and consumables. E-commerce sales increased 43%, and penetration grew across all markets with speed of delivery becoming increasingly important to customers. In the last 12 months, internationals delivered over 2.1 billion items same day or next day with about 45% of those delivered in under one hour.
Flipkart's BBD or Big Billion Day sales event was up double-digits in both top-line and customer growth. The timing of the event was earlier than last year, benefiting our year-over-year sales comparisons in Q3 with the corresponding headwind expected in Q4. Walmex growth outpaced the comparable market for the sixth consecutive quarter and our business in China continued to grow double-digits with strength in Sam's Club and e-commerce. PhonePe also had a good quarter with monthly transactions surpassing $8.7 billion and a total annualized payment volume of approximately $1.6 trillion.
Sam's Club US comp sales ex-fuel increased 7%, including e-commerce growth of 26% with increased transactions and unit volumes accounting for almost the entirety of the comp growth. In response to member feedback, Sam's rolled out new perks in August like Express delivery and the elimination of curbside pickup fees for club tier members, which helped e-commerce growth. Since that launch, e-commerce growth has increased by more than 700 basis points versus our trends in the first half of the year, with club-fulfilled delivery more than doubling in that period. The convenience Sam's provides both inside the club and via e-commerce is a differentiator in the warehouse club channel.
Scan and Go penetration of sales increased more than 250 basis points and the nearly completed rollout of our Jesco exit technology across all 600 clubs is enabling about 70% of members to exit without a check. Members love it with member satisfaction scores on exit now close to 90. Our frictionless approach to serving members by leveraging technology is on full display at our new club opened in Grapevine, Texas, the first of 30 new clubs we expect to open in the coming years. If you're in the area, we'd encourage you to check it out.
From a margin standpoint, consolidated gross margin expanded 21 basis points, led by Walmart US with international results pressured by the timing of Flipkart's BBD sales event. In the US, improved margins reflected strong inventory management again this quarter with a 0.6% decline on more than 5% sales growth, as well as a lower level of markdowns that has allowed us to manage pricing aligned to competitive price gaps. Providing everyday low prices for our customers and members remains a priority, and we continue to lower prices in the US across our assortment of national brands and private brands.
During the quarter, we had price rollbacks on approximately 6,000 items across our assortment, including around 3,000 items in grocery, and have converted nearly 2,000 price rollbacks over the past year to long-term price reductions. We're pleased with how customers and members are responding to our strong value proposition. As our business model evolves, it's encouraging to see our margins improve from a diverse set of offerings.
Global e-commerce losses continue to narrow in Q3, most notably in Walmart US. While improved business mix helped, we're seeing good progress in core e-commerce margins. There are a few key factors driving this improvement, delivery densification; increased penetration of paid expedited delivery orders; and the automation of our supply chain. As we scale our store store-fulfilled delivery business and expand our catchment areas, we've seen significant improvement in batch density with orders per delivery up 20%. In addition, the popularity of expedited delivery has resulted in more than 30% of orders coming from customers and members that elected to pay a convenience fee to receive their delivery in less than one hour or less than three hours.
And lastly, we continue to make progress in the automation of our supply chain as now more than 50% of our fulfillment center volume is automated, which is twice as much at this point last year. This has the obvious benefit of lowering the per-unit cost of delivery. These factors contributed to the third consecutive quarter of approximately 40% reduction in US net delivery cost per order. Importantly, while we drive greater efficiency, we're enhancing service levels with customer NPS for delivery reaching all-time highs this quarter. We're also continuing to reshape our profit composition and business mix as we scale growth drivers such as advertising, membership, marketplace and fulfillment, and data analytics and insights.
Our global advertising business increased 28% in Q3, driven by 50% growth in international, led by Flipkart, which was aided by the BBD event, as well as another strong quarter from Walmart Connect in the US, which grew 26%. We're building a highly unique retail media platform and I've been encouraged by ongoing tests showing customer receptivity to growth in digital ads, especially where ads help customers discover relevant items that are trending, navigate and compare choices, and enjoy Walmart's everyday low prices. We're also pleased with the trends in our membership programs.
In the US, Sam's Club continued to grow membership count and increase its penetration of plus members, resulting in 15% membership income growth, while Walmart Plus membership income grew double digits again this quarter. Within international, membership income in China from our Sam's Club business grew more than 30% as member counts continue to increase.
For Marketplace and Walmart fulfillment services, in the US, marketplace grew 42% in Q3, and we've now seen more than 30% growth in each of the past five quarters. The number of sellers on the platform continued to grow double digits and SKU count is approaching 700 million items. With a broader assortment of the brands and items customers want, marketplace sales in beauty, toys, hardlines, and home all grew more than 20%. We continue to leverage our next-generation supply chain and technology to provide fulfillment for sellers at some of the lowest rates in the industry. As a result, more sellers are using our marketplace fulfillment services with WFS sales penetration reaching record highs at more than 40%.
Outside of the US, we're seeing similar encouraging trends. For example, our marketplaces in Mexico, Canada, and Chile combined increased items by 20% versus last year. In Mexico, the number of items delivered through WFS grew over 50%, and during Flipkart's Big Billion Days event, we experienced same-day delivery growth, 2.5 times higher than last year. This quarter, Flipkart also launched its quick commerce service called Flipkart Minutes in a number of cities, offering delivery in under 15 minutes for a variety of items, including groceries and electronics, and within data analytics and insights, Walmart Data Ventures continues to grow rapidly with net sales up double digits. Our client base has more than doubled over the past year and we're excited about continuing to broaden our reach to new markets by launching the platform in Canada this month.
As a reminder, the margin gains we've reported this year in the US have been burdened by meaningful product headwinds from the outsized sales growth in health and wellness relative to general merchandise. Our plan calls for general merchandise to improve in future quarters, but to continue to underperform health and wellness in grocery until we return to a more normalized purchasing cycle across GM categories. We remain focused on building out our marketplace assortment and emphasizing early emerging categories like apparel, home decor, and automotive supplies. We're continuing to optimize our business to deliver greater efficiency and we're committed to balancing ongoing investments with improved returns for customers, associates, and shareholders.
Our evolving business model with more diversified and durable sources of profit has provided the ability to fund investments while also delivering on our financial framework of operating income growing faster than sales. Price gaps remain healthy and we continue to advocate on behalf of customers for lower prices. Wrapping up Q3 results, consolidated operating income grew 9.8% in constant currency, and adjusted EPS increased nearly 14% to $0.58 per share.
Now turning to guidance. We are raising our full-year guidance to reflect strong third-quarter results. On a constant currency basis, we now expect full-year sales growth of 4.8% to 5.1%, and operating income growth of 8.5% to 9.25% versus prior guidance of growth of 3.75% to 4.75% and 6.5% to 8%, respectively. Compared to our guidance that we provided at the start of the year, we now expect operating income to grow nearly 400 basis points more at the midpoint. Adjusted EPS is expected to be between $2.42 and $2.47 versus prior guidance of $2.35 to $2.43. This full-year guidance implies fourth-quarter constant-currency growth in sales of around 3% to 4% and operating income around 5% to 7.5%. This guidance is slightly above our prior implied Q4 range and contemplates a series of wage investments that Sam's Club announced on September 17 to be effective in Q4.
Recall that we guide sales and operating income growth on a constant currency basis. Currency fluctuations impacted the business negatively in Q3 after being a tailwind in Q1 and neutral in Q2. In Q3, currency pressured reported sales and operating income growth by about 70 basis points and 160 basis points, respectively. If rates stay where they are currently, we would expect a headwind to Q4 reported sales and operating income growth of approximately 100 basis points and 200 basis points, respectively.
In closing, while we still have one more quarter to go before we close out this year. We're really encouraged by our operational and financial performance. We have a lot of conviction in our strategy, and the leaders sitting around the table with me today, along with our team of over 2 million associates around the world are executing on it. Hopefully, you share my sentiment and are as excited as we are to see what else is coming.
We appreciate your interest in Walmart and are now ready to take your questions.
