Sam’s Club is the apparent wiener in its low-cost franks war against arch-rival Costco.
The membership-only retail warehouse’s decision last November to undercut Costco’s $1.50 hot dog-and-soda combo with its $1.38 deal helped catapult Sam’s Club ahead of the rival chain.
The “combo meal’s sales jumped so much, they generated a noticeable boost to profits,” Kath McLay, the former Sam’s Club CEO who has since been promoted to the chief executive position overseeing parent company Walmart’s international operations, told Bloomberg.
Sam’s Club’s same-store sales growth has outstripped that of Costco in the second quarter of this year, according to Bloomberg.
Sales at Sam’s Club stores that have been open for at least a year grew by some 6% in the second quarter, compared to just under 5% for Costco locations, the news site reported.
Shares of Walmart soared by more than 2.4% on Friday after the company released its earning report.
Walmart stock was trading flat on Monday.
Sam’s Club’s $1.38 hot-dog-and-soda combo has proven to be a hit with consumers, according to parent company Walmart. Sam's ClubSam’s Club for years had been an under-performing business with muted sales growth.
But for the last nine quarters, it reported positive sales growth in almost every category it sells in the US, a period that included the pandemic, Piper Sandler analysts said in a research note.
Sam’s Club’s bold decision to slash the price of the combo, which was $1.50, has paid dividends. Getty ImagesSam’s Club, a business unit of Walmart with $84 billion in yearly revenue, has posted 12.7% average annual comparable sales growth since McLay took over the division, according to a Reuters calculation.
McLay, a 49-year-old Australian considered a star within Walmart’s ranks, will take over the international division on Sept. 11, succeeding Judith McKenna, who is retiring after 27 years with the company.
Costco, the wholesale retailer, has seen its stock price dip by some 3% in the last five days. Christopher SadowskiMeanwhile, Costco’s stock price has fallen by more than 3% in the last five days.
The big-box wholesale retailer missed Wall Street earnings estimates in its most recent report as its net profit margin fell by 5.45% in the three-month period ending in May.
Costco has taken great pains to avoid raising the price of its $1.50 hot-dog-and-soda combo. Getty ImagesRetailers have seen their balance sheets come under pressure due to high levels of inflation — a far cry from the free-spending days of the pandemic.
Costco has taken great pains to avoid raising the price of its $1.50 hot-dog-and-soda combo despite price pressures.
The Post has sought comment from Costco.
