Sales trend remain strong
Walmart’s (WMT) Sam’s Club continued with its healthy sales momentum in fiscal 2Q18, thanks to the company’s strategic efforts that include a multichannel approach. Sam’s Club has reported positive comps over the past six quarters.
Sam’s Club saw sales of $13.7 billion (excluding fuel), up 2.1% YoY (year-over-year). Its comps rose 1.2%, reflecting a 2.1% increase in traffic partially offset by a 0.9% decline in average ticket size. Inflation in tobacco further supplemented its comps growth.
Strong e-commerce sales added 80 basis points to the comps. During the quarter, membership income improved 1.3%, and penetration expanded 150 basis points. In comparison, rival Costco Wholesale (COST) is also seeing strong comps growth, driven by higher traffic and ticket in the US (SPY).
Walmart’s value pricing at Sam’s Club and multichannel offerings are boosting the segment’s sales. The company’s e-commerce arm is performing well with 29% YoY growth in club pickup services and strength in the direct-to-home business.
Meanwhile, shopper-friendly services, including Scan & Go, generate positive consumer response. During fiscal 2Q18, the segment’s net sales increased 2.3% (with fuel), driven by 1.4% growth in comps.
Category sales in fiscal 2Q18
In fiscal 2Q18, the Fresh category witnessed low-single-digit comps growth, driven by higher sales of meat, floral, and produce. Meanwhile, the Consumables category also saw low-single-digit comps growth, reflecting increased sales of paper goods, laundry, and home care products.
The Sales at Home and Apparel categories saw mid-single-digit growth with increased sales across most of the Homelines and Apparel sub-segments, primarily in toys, outdoor living, and kitchen. Also, the Health and Wellness category marked mid-single-digit comps growth, driven by improved sales of nutrition and protein drinks.
The Grocery and Beverage segment’s comps fell in the low single digits, reflecting declines in vegetables, oils, and snacks and partially offset by improved sales in baking products and adult beverages.
The Technology, Office, and Entertainment division’s comps also decreased in the low single digits as growth in audio and office electronics were offset by softness in television sales. Meanwhile, tobacco witnessed a low-single-digit decline in comps, reflecting tough YoY comparables.
The retail giant’s management expects Sam’s Club to report healthy comps growth, driven by the combination of in-store and e-commerce activities. Its fiscal 3Q18 comps are projected to grow in the range of 1.0%–1.5% (excluding fuel).