The Sam's Walmart Club was almost left for dead – now it's staging a remarkable renaissance



Sam's Club continues to find its relevance in the minds of buyers.

And that should make Walmart's long-time leaders smile (including the former CEO of Sam's Club and now Walmart CEO, Doug McMillon), who has seen the chain of member warehouses lose for years his battle against the costco nemesis. The rise of Amazon Prime's activities also weighed on the Sam's Club by eliminating higher-income buyers.

The recovery is "absolutely real", said Yahoo Finance, John Furner, CEO of Sam's Club.

Place your bets, investors.

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Tournament of the Sam's Club"data-reactid =" 19 ">Tournament of the Sam's Club

Walmart said Tuesday that same-store sales at Sam's Club in the fourth quarter rose 3.7 percent. Wall Street analysts were looking for an increase of about 3%. Traffic in the stores increased by 6.4%. At the same time, gross profit margins increased 98 basis points from a year earlier.

Contribution income increased 2.2% year-over-year. Online sales jumped 21%.

For the full year of 2018, same-store sales at Sam's Club increased by 5.5%.

The overall performance is remarkable considering the situation of the chain from 2015 to 2017. Sam's Club was going through a mini crisis. He has tested the new payment technology and ventured into high end items. However, sales did not respond positively as Costco continued to be the destination of choice for bulk organic foods and other eclectic products.

Customers forward their cart to their car in the parking lot of a Sam's Club store in Concord, New Hampshire, on Friday, February 23, 2018. (AP Photo / Charles Krupa)

In addition, Sam's Club stores were too crowded, limiting the company's sales and profit potential.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Enter John Furner, a longtime executive at Walmart, took charge of Sam's Club in February 2017. Furner quickly decided to close 10% of Sam's Club stores in January 2018 to improve the channel's economic conditions. While Sam's Club is still able to test new technologies in its clubs, Furner's focus is on the understanding of the main buyer (a buyer earning between $ 75,000 and $ 125,000 per year) and on the construction of the product range accordingly. "Data-reactid =" 36 "> Entrance John Furner, a long-time senior manager at Walmart, took charge of the Sam's Club in February 2017. Furner quickly decided to close 10% of the store's base. Sam's Club in January 2018 to improve the economic conditions of the chain.In its clubs, which use new technologies, Furner focused on understanding the customer (a customer who earns between 75,000 and $ 125,000 per year) and build the product suite accordingly.

Furner told Yahoo Finance that Sam's Club had won victories with fresh products and free shipping for ecommerce orders placed by premium subscribers.

Sam's Club has now recorded nine consecutive quarterly gains. Same store sales increased for 10 consecutive quarters.

Furner says he is satisfied with the current size of the Sam's Club store fleet – no new wave of closures is expected.

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Keep Sam's Club in the family"data-reactid =" 40 ">Keep Sam's Club in the family

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This writer has said for years& nbsp; that Walmart should leave Sam's Club. Despite the improvements in business, Sam's Club's operating profit margins are below the company average given its wholesale business model. In addition, one could argue that Walmart would be better served by allocating its 100% capital expenditures to the Walmart brand. "Data-reactid =" 41 "> This author has said for years that Walmart should abandon the Sam's Club In this business sector, Sam & # 39; s operating profit margins. "s Club are below average for the company given its wholesale business model. It could further be argued that Walmart would be better served by allocating its 100% capital expenditure to the Walmart brand.

However, Walmart remains committed to keeping the Sam's Club within his family. As long as the company continues to get in shape, Walmart executives can be rewarded for this decision.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi"data-reactid =" 43 ">Brian Sozzi is a senior editor at Yahoo Finance. Follow him on Twitter @BrianSozzi

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