Key Points:
- Sam’s Club reported superb FQ2 results, which is best captured by the +400bps acceleration in comp-transactions (and observed traffic). That acceleration likely reflects Sam’s capturing the traffic that is flocking to its fuel centers.
- Sam’s strong traffic is also translating into stronger sales in produce, consumer electronics, and hardlines, and good growth in membership income (+6%).
- Walmart didn’t experience the gas price benefit. In fact higher gas prices looks to have been a headwind until just recently.
Sam’s Club is a massive business at nearly $100B in annualized sales; however, Walmart US at $480B typically grabs all the attention. (Today’s stock reaction is a strong example of that.) Our note will highlight the stepchild and celebrate its very impressive FQ2 sales and earnings results. Ex-Gas comps were +4.4% (+50bps QoQ) driven by comp-transactions +7.0%, up a stunning +400bps QoQ. (The comparison base was similar.) Per store observed traffic (per Advan) matched the reported figure. Category-wise, “fresh / freezer / cooler” accelerated from +LSD to +MSD driven by produce, fresh meat, prepared foods, and bakery, which demonstrates that members find the offerings quality and value compelling, and one of the principal reasons for being a member. Similarly, consumer electronics comps accelerated from flat to plus double-digits and the hardlines category to plus mid- to high-single-digits. Membership income increased +6% and gross profit dollars, +13.3%.
In Advan’s observed traffic figures, it looks like Sam’s stronger result is partially a function of strong cross-flow from its fuel centers (something that Costco and BJs are also experiencing). As shown, for Sam’s the negative impact from the gas price shock was short lived and it’s now enjoying a faster 2-yr run-rate than in March; by contrast, Walmart US has just recently recovered to its March run-rate.
