Costco sets bar high again for Sam’s Club

The warehouse club channel remains one of the hottest segments in retail as evidenced by the solid third-quarter results Costco reported earlier this week on the heels of the equally solid first-quarter results Sam’s Club reported last week.

Although the company’s operate on different fiscal years, the quarterly periods are comparable with only one week separating Costco’s May 8 third-quarter end date from Sam’s Club’s April 30 end date.

Recall, Sam’s Club reported a same-store sales gain of 4.2%, which topped its guidance for a 1% to 3% increase, while operating profits advanced 7% to $459 million, and total sales increased 4.9% to $11.3 billion. Sam’s doesn’t offer specific details regarding new member signs ups and renewals, but president and CEO Brian Cornell did say, “We saw broad-based strength in renewal rates across membership categories in the quarter.”

As for Costco, it sales grew at a faster clip that Sam’s and the company provides substantially more disclosure around membership trends.

A larger-than-expected inventory charge dinged Costco’s third-quarter earning per share, but overall sales surged 16% to $20.2 billion and were aided by higher gas prices and foreign exchange benefits. Total company same-store sales increased 12%, but that number fell to 7% if gas and currency benefits were excluded. Same-store sales at the company’s U.S. operations increased 10%, or 6% excluding gas and currency benefits, while international comps were 18%, or 11% if gas and currency factors are excluded.

About 3% of the 16% total sales increase stemmed from inclusion of results from a 50% owned Mexican joint venture that were not included in the prior year reporting period.

Costco enjoyed strong growth in membership income with the addition of new members and upgrades of existing members. Total membership income increased 10.1% to $435 million as the company said it grew its $100 executive membership level to 11.3 million members with about 29,000 new sign ups weekly.

Sam’s has been aggressive in promoting its $100 Plus membership program and uses the savings possible through its eValues rewards program as lever to encourage upgrades, but it is impossible to gauge the effectiveness of those efforts as Sam’s doesn’t provide a breakdown on its membership base.