Healthy sales trend
Walmart’s (WMT) Sam’s Club reported better-than-expected comps growth in fiscal 1Q18 thanks to the company’s strategic efforts to drive traffic and strong e-commerce sales. The segment has generated positive comps growth over the past five quarters.
Sam’s Club reported sales of $12.9 billion (ex-fuel), up 1.4% YoY (year-over-year). Comps rose 1.6% driven by a 1.1% increase in traffic and a 0.5% growth in average ticket. In addition, membership income improved 0.9% during the quarter with a 23-basis-point expansion in penetration.
In comparison, rival Costco Wholesale (COST) is also witnessing improved sales across most of its merchandise categories on the back of increased traffic and higher average transactions.
Sam’s Club’s value pricing, in-store shopping experience, and extensive offerings seem to be pleasing shoppers. In addition, the company’s e-commerce initiatives supplemented comps by 80 basis points. Club pickups rose ~30%, while the direct-to-home business also remained strong. Net sales rose 2.8% (with fuel), driven by a 3% rise in comps.
Category-wise, the fresh, grocery, and electronics categories saw comps decline as deflation in eggs, a product mix shift in frozen, weakness in certain products, and lower television sales negatively impacted sales. Meanwhile, the consumables, home & apparel, health & wellness, and tobacco categories delivered solid results.
Going forward, management projects comps (ex-fuel) to rise in the range of 1%–1.5% in fiscal 2Q18, driven by the company’s continued efforts to accelerate traffic growth and enhance its digital capabilities.
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