Two top Walmart executives are departing the company, nearly four months after CEO John Furner took over, CNBC learned on Friday.

Tom Ward, the chief operating officer of Walmart’s warehouse Sam’s Club, is retiring, while Cedric Clark, Walmart’s executive vice president of U.S. store operations, is leaving the business, internal memos viewed by CNBC shows. 

A replacement for Clark is expected to be announced in the “coming weeks,” the memo stated. It’s unclear when the company expects to fill Ward’s position. 

The leadership shuffle comes after Furner took over as Walmart’s CEO in February. Alongside Furner’s promotion, the company elevated four new top executives to work alongside him earlier this year. Seth Dallaire was promoted to chief growth officer, overseeing the company’s marketplace and advertising businesses, David Guggina was elevated to CEO of Walmart U.S., Chris Nicholas became CEO of Walmart International and Latriece Watkins became CEO of Sam’s Club. 

Furner took over the largest U.S. retailer during a period of sustained growth, fueled by gains with higher-income consumers and the expansion of its e-commerce business.

Walmart announced fiscal first-quarter earnings on Thursday, where it issued mixed results and said its business remained strong despite consumer pressures and high gas prices.

The leadership changes were first reported by the Wall Street Journal.

With all eyes on the health of the U.S. consumer, Walmart‘s fiscal first-quarter earnings report Thursday morning may offer Wall Street some of the best clues yet. 

The big box retailer is expected to report another quarter of growing sales and profits, but its commentary on consumer spending – if it’s seeing any pressure and where – could offer investors a view into the strength of the U.S. economy. 

Here’s what analysts expect Walmart to report for the quarter, according to consensus estimates from LSEG:

• Earnings per share: 66 cents per share
• Revenue: $175 billion

In the three months since Walmart last reported earnings, there’s a new conflict in the Middle East, gas prices have soared and consumer sentiment has plummeted, falling to a fresh record low in May. The flurry of bad news comes on top of years of sticky inflation, higher interest rates and a global trade war that’s pushed prices even higher. 

Walmart has long been among the best positioned to weather just about any economic storm, but given the wide consumer segments it caters to, it’s uniquely positioned to see whether and where cracks in the economy are forming. 

Long a value play among lower-income shoppers, Walmart in recent years has been winning over more high-income consumers, which has helped fuel its growth and insulate it from economic shocks that have hit lower earners more acutely. 

When reporting earnings on Thursday morning, investors will want to know: Are higher-income shoppers still as resilient as they’ve been, or are higher gas prices having an impact? How much more pressure is the lower income shopper facing? 

If consumers start pulling back, leading to a greater concentration of lower-margin groceries over higher-margin discretionary goods, Walmart’s additional revenue streams are expected to help offset those pressures. Its advertising and marketplace businesses are both high-margin revenue streams that have helped Walmart keep prices low and maintain profits.

So far this earnings season, major companies have largely said consumer spending has held up in the face of higher gas prices. But that resilience also came amid higher tax returns, which Target said on Wednesday may have fueled some of the growth it saw during the first quarter. 

“We believe this year’s higher tax refunds were a source of upside to consumer spending in Q1, and that benefit will be fading over the rest of the year,” finance chief Jim Lee said on a call with analysts. “While consumers have proven to be resilient so far, sentiment has been declining recently. And we’re keeping a close eye on their spending behavior.” 

Investors will want to know if Walmart has seen a similar trend and what that could mean for the duration of the fiscal year and the economy at large.

CLIFTON, New Jersey — Along with aisles of diapers and colorful onesies, Target shoppers in some of the retailer’s big-box stores can now find baby brands typically carried by specialty boutiques.

Shoppers can see, feel and test strollers, car seats and high chairs outside of cardboard boxes at about 200 stores, or roughly 10% of the retailer’s footprint. They can find merchandise from high-end brands, including a $1,000 UPPAbaby stroller. And customers can browse nearly 2,000 new baby items, which are available across all of the retailer’s stores and online.

Target’s “baby boutiques,” which have rolled out over the past two months, are just one piece of a broader push to refresh stores and woo a crucial customer base: busy families, who have increasingly turned to rivals like Walmart.

Whether Target makes progress with those shoppers will help determine whether CEO Michael Fiddelke, who stepped into the company’s top role in early February, can follow through on his pledge to end the company’s three-year sales slump. The retailer is scheduled to report its first-quarter earnings on May 20, its first three-month period under the new CEO.

In an interview with CNBC, Chief Merchandising Officer Cara Sylvester said families with children ages 5 and under spend two times as much, and families with children across age groups visit stores twice as much as the average Target shopper.

She said Target recognized it had a large share of sales from young families when it took a hard look at its business after Fiddelke got tapped to lead its turnaround efforts. She said the realization inspired Target to lean more into that competitive edge.

“We see an incredible opportunity at Target to really deepen our relationships with busy families and become their first choice for even more of life’s everyday needs,” Sylvester said.

That strategy, which hinges in part on improving the quality of its offerings, stepping up its store experience, and expanding convenient options like same-day pickup and delivery, is critical to boosting sales and fending off Walmart and Amazon.

The big-box retailer said in March that it expects to return to annual sales growth this year. It said it anticipates net sales will rise about 2% year over year and will grow in every quarter of the year compared with the year-ago periods.

While customer traffic across Target’s stores and website has dropped for the past four quarters in a row, there are some promising signs that store traffic is growing again, according to Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate visits to locations. 

Even so, Target faces challenges to its turnaround plan. Among them, it must overcome stiffer competition from rivals, a fresh threat of a boycott from a major teachers’ union as it heads into back-to-school season and the risk of higher gas prices dampening consumer spending.

Those rising gas prices could exacerbate the “K-shaped economy,” the widening gap in spending between lower- and higher-income Americans, said Simeon Gutman, a Morgan Stanley retail analyst. At retail competitor Walmart, gains among wealthier households have helped offset losses of sales among cash-strapped customers, he said.

“I don’t think Target is in as good a position as others in that regard,” he said.

Still, he said he’s encouraged by changes Target has made to sharpen its stores and refresh merchandise categories and believes that will drive more customer traffic.

Births in the U.S. have tumbled from a peak of 4.32 million in 2007 to 3.61 million in 2025, according to preliminary data from the Centers for Disease Control and Prevention’s National Center for Health Statistics. That represents a roughly 16% drop over the past 18 years, which researchers have attributed to a variety of factors including a decline in teen pregnancies and a rise in women delaying having children until later in life.

Sylvester, however, said even with the lower birth rate, Target needed to shake up the way it appeals to families, beginning with the baby aisles. She said Target’s research shows that when consumers become parents, they tend to consolidate the number of places where they shop because they have less time. That means if Target can win those customers, it can sell not only more diapers and wipes, but also more groceries and clothing, she said.

Sylvester added Target is prioritizing the baby department because it’s a way to earn trust with first-time parents who have a large lifetime value across all of the retailer’s categories.

Target is the third-largest retailer in the U.S. for the baby sector in terms of market share, but has lost ground with competitors in recent years, according to market researcher Numerator. The firm includes baby gear such as strollers, diapers, formula and baby food in its category definition, but excludes baby apparel.

Walmart captured the largest share with 27% of the category, followed by Amazon with 24.4% and Target with 17.6% in the 12-month period that ran through the end of February, the most recent data available.

However, Target has declined from 18.6% market share in the past two years, compared with Walmart, which has seen its market share grow from 25.4%. Amazon’s market share has remained roughly flat, according to Numerator.

Target declined to say how much it is spending to turn some of its baby departments into boutiques, but the retailer has increased investments to help drive its turnaround. The company said in March that it will spend about $5 billion on capital expenditures this fiscal year, an increase of more than $1 billion from last fiscal year. The funds will go toward store openings and remodels.

Sylvester said Target plans to add baby boutiques to more stores, but said it hasn’t yet decided the timetable.

By the retailer’s own admission, Target has lost the loyalty of some families. At an investor presentation at Target’s headquarters in early March, Sylvester delivered a blunt assessment.

“Our performance over the last few years has not met expectations. And that is on us,” she said. “We lost the clarity and the discipline that make Target a place loved by busy families.”

It is unclear how much of the decline in store and website traffic has specifically come from families, but Morgan Stanley’s Gutman said he sees the baby category as “inextricably linked to Target’s success” because it is an “on-ramp to greater sales and then to multiple years of higher wallet share.”

“It’s one of these categories where I think they have a right to win, and they ought to,” he said.

Estée Lauder sued Walmart in California federal court over allegations the big-box retailer sold counterfeit beauty products on its website and didn’t do enough to ensure only authorized and authentic merchandise was offered to consumers. 

Estée Lauder said it purchased, inspected or tested a number of products sold on Walmart.com that used the Le Labo, La Mer, Clinique, Aveda, Tom Ford and Estée Lauder trademarks but were determined to be fakes, according to the suit, filed Monday.

The products include counterfeit versions of Estée Lauder’s Advanced Night Repair serum, a Le Labo fragrance, a Clinique eye cream, a La Mer lotion, an Aveda hair brush and a Tom Ford fragrance. 

It’s unclear when Estée Lauder bought and tested the products but the suit comes several months after CNBC published an investigation into counterfeit beauty products and fraud on Walmart.com.

Two of the counterfeit products cited in CNBC’s investigation — Estee Lauder Advanced Night Repair serum and Clinique Smart Clinical Repair Wrinkle Correcting Eye Cream — were also mentioned in Estée Lauder’s lawsuit. It’s unclear if the products cited in the suit are the same counterfeits CNBC provided to Estée Lauder. 

In response, Walmart initially told CNBC in a statement it requires “all sellers to offer only authentic, lawful merchandise” and it doesn’t tolerate “bad actors” on its platform. It then recalled the message and sent an abbreviated statement to CNBC two hours later that removed that language.

“We are aware of the complaint and have zero tolerance for counterfeit products,” the revised statement read. “We will respond appropriately with the court when we are served.” 

Estée Lauder didn’t return a request for comment. 

While the products were sold by third-party sellers on Walmart’s online marketplace, Estée Lauder said the company played an active role in facilitating those sales to shoppers in its suit. The legacy beauty company called Walmart’s conduct “extreme, outrageous, fraudulent … despicable and harmful.” 

The counterfeit products were promoted and advertised to shoppers on the platform, Estee Lauder’s trademarks were used in search engine optimization tools to drive traffic to the listings and Walmart profited from the sales, the complaint stated. 

Further, “a person shopping on Walmart.com would have reasonably believed that Walmart, and not third-party sellers, was the seller” of the item, which could have caused confusion among shoppers, the complaint states. 

At the heart of CNBC’s investigation into Walmart’s online marketplace was the steps the company took, or didn’t take, to vet its third-party sellers and the products they were offering to prevent fraud and the sale of fakes on the platform. 

In its complaint, Estée Lauder said Walmart promoted the “reputation and professionalism” of the sellers permitted to operate on the platform but said the retailer actually does “very little to ensure that only authorized and authentic products are available” for sale. 

“This is readily apparent given the [counterfeits] were permitted to be sold on Defendants’ website despite their stated careful selection process in who they choose as a Marketplace seller/partner,” the complaint states. “Accordingly, Defendants know or had reason to know that the sellers they partnered with and ‘regularly review[ed]’ were selling products which infringe upon the Estée Lauder Marks.” 

Walmart’s online marketplace has become a key part of its strategy to grow profit faster than sales and better compete against its longtime rival, Amazon. The rapid growth of the online platform helped fuel Walmart’s ascent to a $1 trillion market cap last week, putting it in an exclusive club made up almost entirely of technology companies. 

However, the strategy has come with risks, CNBC’s investigation revealed. Offering counterfeit, potentially dangerous, products to shoppers through third-party sellers on the marketplace opens Walmart up to liability and could erode the customer trust at the core of its brand.

Ever since a 2010 court ruling that arose after Tiffany sued eBay over counterfeit products on the platform, it can be tough for brands to hold platforms accountable for their role in selling counterfeit goods. Sometimes, they avoid lawsuits unless the conduct is extreme or particularly flagrant, experts previously told CNBC.

The Shop Safe Act, a bipartisan federal bill that aims to curb the sale of fakes on online marketplaces, is designed to address some of the issues posed by the Tiffany v. eBay ruling by incentivizing platforms to better vet sellers and the products they’re offering. When platforms comply with certain anti-counterfeiting measures, they could be shielded from liability if a seller offers a fake product. 

Brands widely supported the legislation, but it has so far failed to pass at least three times. That’s partially because Walmart and other online marketplaces like Amazon, Etsy and eBay have lobbied against aspects of it, two U.S. Senate aides, who spoke on the condition of anonymity because the discussions were private, previously told CNBC. 

Walmart and Google said Sunday that shoppers will soon be able to use Google’s artificial intelligence assistant Gemini to more easily discover and buy products from the retail giant and its warehouse club, Sam’s Club.

Incoming Walmart CEO John Furner and Google CEO Sundar Pichai announced that the companies have teamed up on stage at the National Retail Federation’s Big Show, an annual industry conference held at New York City’s Javits Center.

The CEOs did not say when the new feature will launch or share financial terms. The company said the experience will start first in the U.S. and then expand internationally.

With the Google deal, Walmart is boosting its effort to keep up with customers who are using AI chatbots to save time or look for inspiration. Walmart announced a deal with a rival to Gemini, OpenAI’s ChatGPT, in October to allow shoppers to make purchases with “Instant Checkout,” a feature that allows them to buy an item without leaving the AI chatbot. OpenAI recently launched that feature with Walmart and it has Instant Checkout deals with other retailers, including Etsy and several Shopify merchants like Skims, Vuori and Spanx.

Walmart also has its own AI chatbot, a yellow smiley-faced assistant on its app called Sparky.

“The transition from traditional web or app search to agent-led commerce represents the next great evolution in retail,” Furner said in a news release. “We aren’t just watching the shift, we are driving it.”

In his remarks on stage, Furner, who will step into Walmart’s top role on Feb. 1, said Walmart is “rewriting the retail playbook” and, with AI, it’s “trying to close the gap between I want it and I have it.”

Pichai said that Google is excited to work with Walmart and described the adoption of AI as a “transformative” moment.

For Walmart, the evolution of customers’ shopping habits — such as searches that start in an AI chatbot rather than its own app or website — is reshaping the retailer’s digital strategy. In a statement, David Guggina, Walmart U.S.’s chief ecommerce officer, said agentic AI “helps us meet customers earlier in their shopping journey and in more places.”

“Over time, these agents will make it easier for customers to find what they need, want and love,” he said.

Walmart leaders have also been vocal about how AI will change the workforce and employees’ roles, comments that carry additional weight as the company is the largest private employer in the U.S.

Walmart CEO Doug McMillon, who is retiring and will be succeeded by Furner, has spoken about the sweeping impact of the technology, saying that “it’s very clear that AI is going to change literally every job.”

Holiday shopping has always felt like a “chore” for Amrita Bhasin. 

Between deciding what to buy, comparing prices and checking reviews, the 24-year-old retail tech CEO said she spent more than 15 hours each year buying gifts for her friends and family, a process that took the joy out of giving. 

But this year, Bhasin said she did all of her shopping in a fraction of the time and even had a little “fun” — all thanks to her new personal assistant: ChatGPT. 

“I feel like I’ve got that physical store associate that I’m talking to, so I feel like I’m getting better recommendations. I actually think my tendency to buy is higher because of ChatGPT,” Bhasin, based in Menlo Park, California, told CNBC. “It has really changed the game.” 

Bhasin is one of the many shoppers turning to AI platforms like OpenAI’s ChatGPT, Google‘s Gemini and Perplexity this holiday season to help them buy gifts for their loved ones, and maybe a few for themselves, too. Whether consumers use them to get gift ideas or compare prices, AI platforms are poised to reshape the shopping experience and drive billions in revenue this holiday season as it becomes harder to get discovered on traditional search platforms.

In a report published last month, Salesforce said it expects AI to drive a staggering $263 billion in global online holiday sales this year, representing 21% of all holiday orders. 

Though estimates vary widely, surveys conducted by Visa, Zeta Global and other organizations found that between 40% and 83% of consumers plan to use AI for shopping this holiday season. Meanwhile, AI traffic to U.S. retail sites surged 760% between Nov. 1 and Dec. 1, according to Adobe. 

While AI shopping is in its early stages, initial reads on how shoppers are interacting with it show the opportunity it can bring for retailers. Shoppers arriving on retail websites from generative AI platforms are 30% more likely to buy something and about 14% more engaged than those coming from non-AI sources, meaning they’re spending more time on the site and are less likely to leave immediately, Adobe found. 

These AI-fueled shopping visits now generate 8% more revenue per session, the firm found. AI tools can also help shoppers spot deals and aid lesser-known brands in getting discovered — about half of the gifts Bhasin bought this year came from brands she’d never shopped before.

“It’s where consumers are going, because they’re just asking questions around, like, ‘Hey, where can I find the best gift under $20 for my niece that cares about these things?'” said Kimberly Shenk, the founder and CEO of Novi, a tech firm that helps brands adjust to AI shopping.

The surge in AI shopping has led retailers big and small to rethink their strategies to ensure they’re showing up where customers expect them to be. Walmart and Amazon have each launched their own AI shopping assistants, and others, including Walmart, Target and Etsy, have partnered with OpenAI so customers can search for items or buy products without leaving ChatGPT.

Apparel retailer PacSun said it hopes to join OpenAI’s platform and in the meantime is reformatting its website so its teen-friendly clothes will show up in AI searches. Others are changing their budgets, directing funds away from SEO, or search engine optimization, and into AEO, or answer engine optimization, and hiring outside firms to help them navigate the shift. 

Shenk said her company has seen a “major surge in demand” from retailers and brands that have started to see a steep decline in traffic from social media ads and search engines.

“I’ve heard so many brands talking about their paid advertising in Meta and all these different places really just not performing and ultimately seeing a ton of that transition over to AI mode in Google, ChatGPT, Perplexity,” Shenk said. “I think people were caught off guard … so brands are really scrambling to figure out, ‘How do I know if I’m visible? I have no idea if I’m even showing up. I have no idea how I’m showing up, but I’m seeing all my traffic drop off, and I got to figure that out. Now.'” 

Brands are walking a tightrope. They have to adjust to consumers who are using AI to discover products, but still be present through traditional channels for those who prefer old-fashioned shopping. While AI companies and retailers themselves have made massive investments in the chatbot shopping experience, some consumers also say it doesn’t yet measure up to searching for gifts themselves.

When incoming Walmart CEO John Furner steps into the retailer’s top role, he will try to follow up a period of dramatic share growth that many of Walmart’s rivals have failed to match.

Walmart’s stock has more than quadrupled since outgoing CEO Doug McMillon began in the role in February 2014. Across nine of the 12 calendar years when McMillon has been Walmart’s leader, the company posted positive stock returns.

Among Walmart’s main rivals in the retail and grocery business, only Amazon and Costco have had better stock returns since McMillon took the job. Meanwhile, Walmart’s stock has outperformed those of competitors like Target, Dollar General, Dollar Tree, Kroger and Albertsons.

McMillon will officially step down at the end of January, but will stay on as executive chairman and advisor. While Furner will face a challenge in replicating the company’s performance under his predecessor, he has been a key catalyst for the company’s success as CEO of its largest sector, Walmart’s U.S. business.

Along with huge gains on Wall Street, McMillon oversaw a significant period of growth for the nation’s largest grocer, which included sharp sales increases, wage hikes for hourly workers and transformation of the nation’s low-price leader into a major e-commerce player. He also steered the retailer through the tumult of a global pandemic, historic levels of inflation and higher tariffs.

Sales during McMillon’s first three years in the role were roughly flat — with revenues of $486 billion, $482 billion and $485 billion in the fiscal years ending January 2015, 2016 and 2017, respectively.

Yet those years were followed by steady growth, and those gains have accelerated since 2021, after the Covid pandemic pushed more people to shop online and inflation nudged even wealthier shoppers to seek value. Walmart posted annual revenue of about $681 billion in the fiscal year ended earlier this year, an approximately 40% jump from the company’s annual revenue the first year of McMillon’s tenure.

This year, Walmart is on track to post annual revenues of over $700 billion for the first time ever. Ironically, however, it is also expected to lose its crown as the largest retailer by annual revenue to its biggest e-commerce rival, Amazon.

Earlier this year, Amazon leapfrogged Walmart in quarterly sales for the first time. Compared to Walmart, it has a different mix to its business because of its massive cloud computing, advertising and seller services businesses.