Good Morning. This is Katie Deighton filling in for Nat Ives. Today, Walmart falls off its perch as the country’s largest company by revenue, despite an advertising boost; officials call for LA28 Chair Casey Wasserman to step down; and the toy industry returns to growth thanks to a more mature customer. 

Walmart’s advertising business continues to flourish.

For the quarter ended Jan. 30, global advertising revenue grew 37%. For the full year, the business was up 46% to nearly $6.4 billion, contributing to the retailer’s growing profit margins, Sarah Nassauer reports.

The retailer also reported strong sales growth as it continues to attract more shoppers of all income groups to its groceries and online delivery service. U.S. comparable sales rose 4.6% in the quarter, and U.S. ecommerce sales were up 27%.

But the end of the fiscal year also marked the first time Walmart reported lower annual sales than Amazon.com, knocking the retail behemoth off its perch as the country’s largest company by revenue.

Walmart executives on Thursday’s earnings call also noted…

• Orders from customers who engaged with Sparky, the company’s AI shopping agent, had a value around 35% higher than those who didn’t.
• Walmart saw triple-digit growth in advertising during the quarter within its connected TV business, Vizio, which it acquired in 2024 for $2.3 billion.
• Advertising sales and membership fees made up nearly one-third of the retailer’s operating income for the quarter.
• Walmart moved units including its marketplace, Vizio, ads and data services from inside Walmart US as part of a bid to scale them globally.

Sports and entertainment mogul Casey Wasserman has seemingly played ball since his name appeared in the Epstein files.

He said he “deeply regrets” the flirty emails he exchanged with Ghislaine Maxwell. He sat back as LA28 Olympics organizers reviewed whether he should keep his role as chair (he should, they concluded). And he began the process of selling his agency.

It might not be enough.

Dozens of public officials say Wasserman risks becoming a distraction in L.A.’s effort to stick the landing on a successful Olympics, mounting pressure on him to step down, Paul Kiernan writes.

The Los Angeles County Legislative delegation, which represents 37 state legislators, said Wednesday that Wasserman’s “past personal conduct has become a distraction and LA28’s leadership must be singularly focused on ensuring a safe and successful games.” This week, Los Angeles Mayor Karen Bass told CNN that Wasserman ought to leave.

Others have noted that that LA28 is beating its revenue targets, and worry that a sudden shake-up in its leadership could increase the risk of taxpayers needing to foot part of the bill for the Olympics. Wasserman has said that he never had a business or personal relationship with Epstein.

Meanwhile, in India...

Bill Gates canceled his keynote address at an artificial intelligence summit as the Microsoft co-founder faces growing scrutiny over his ties to Jeffrey Epstein. [WSJ]

After two years of stagnation, the U.S. toy industry is finally growing again. And it's no thanks to those pesky kids.

Toy companies are increasingly targeting teens and adults and racing to turn streaming hits like "KPop Demon Hunters" and established franchises into high-end collectibles, Connor Hart writes.

Sales of traditional children’s toys are expected to be flat or slightly down this year, reflecting pressures from declining birth rates and competition from digital entertainment, industry executives said.

In contrast, older fans are driving growth—drawn to nostalgia, hands-on hobbies and premium collectibles that can sell for hundreds of dollars (seriously).

At this week's Toy Fair in New York City, companies from established producers  to hobbyists hoping to launch the next “Labubu” or “Squishmallows” showcased products tied to blockbuster entertainment brands and nostalgia-fueled fandoms.

“The toy aisle is shrinking,” said Billy Lagor, Hasbro's president of toys and board games. “The fan aisle is growing.”

Aston Martin is planning to sell its Formula One naming rights after a "highly challenging" finanical year. [WSJ]

Live Nation said its advertising and sponsorship business grew 17% year-over-year, while ticketing sales increased 1%. [WSJ]

The first ChatGPT advertisers have arrived. [Adweek]

Accenture told senior staff that their chances for promotion will now be tied to their enthusiasm for using AI tools. [Financial Times] 

Nestlé followed in Unilever’s footsteps and offloaded its ice-cream business. [WSJ]

A comprehensive analysis of the “Wicked”-esque marketing campaign promoting Emerald Fennell’s “Wuthering Heights,” including branded horse-and-cart journeys. [Popbitch]

An interview with one of the few CMOs to start off in social media. [Link in Bio]

Five Below shares are soaring as parents clamor for cheap stuff for their kids. [Bloomberg]