ROMEOVILLE, Ill. Oct 11 Sam's Club is trying to
stand out against its larger, faster-growing rival Costco
Wholesale Corp with trendier holiday merchandise this
year, hoping that new goods will spur its members to spend more.
Its previous moves, including improving food and adding
"treasure hunt" items such as $6,000 Cartier watches, have
failed to spur strong results. Sales and the growth trajectory
at the retail warehouse chain, part of Wal-Mart Stores Inc
, continue to lag behind Costco.
"We've been underwhelming our members," Chief Executive
Officer Rosalind Brewer said as she toured a new Sam's Club in
Romeoville, Illinois, last week. Some goods just have not been
"on trend" enough, she said.
When Wal-Mart meets with analysts and investors on Oct. 15,
Brewer will give more details about the merchandising strategy
for Sam's Club, a membership-only retailer.
The chain is adding 132 new general merchandise goods for
the holiday season, up from 56 a year ago. They include
everything from sets of "heirloom" Christmas ornaments that look
like ones sold in boutiques, to women's UGG boots priced below
the $200 or more they sell for at department stores.
Sam's Club has lacked a bit of the "flair" that Costco has,
said Wolfe Research analyst Scott Mushkin. Adding new items may
help but could be more of an "incremental positive" rather than
really moving the needle, he said, without seeing the goods.
Costco has not changed its holiday strategy and is keeping
an eye on its rival, Chief Financial Officer Richard Galanti
said on Oct. 9. Sam's Club's discount booklets, launched months
ago, are similar to ones Costco has used for years.
"We are going to do what we do," Galanti said on a
conference call. "If they keep doing it, it must be working."
Sales at stores open at least a year, a retail metric known
as same-store sales, show that Costco has an edge. Costco's U.S.
same-store sales rose 5 percent last quarter. Sam's Club's
same-store sales rose 1.7 percent last quarter and it expects
them to be flat to up 2 percent this quarter.
"The results have not been consistently barn burning while
Costco's have," said Cowen & Co analyst Faye Landes. In the
past, Sam's Club's formula has not seemed to be "quite as nailed
down as Costco's," she said.
Sam's Club, which has 627 warehouses in the United States
and Puerto Rico and is opening 15 to 20 more a year, declined to
forecast sales or profit margins on the new items. Costco runs
638 warehouses, including 454 in the United States and Puerto
Rico, and plans to open 18 more U.S. ones this fiscal year.
Sam's Club, which got its start in Oklahoma 30 years ago,
has been trying to stand out as a warehouse of brand names. It
is the only club to sell Apple Inc devices and also
stocks items such as The North Face fleece jackets from VF Corp
and Under Armour Inc shirts.
It hopes to lure members like Sue Skeer to spend more. Skeer
said she joined Sam's Club 16 years ago and goes there about
twice a week, mainly to buy fruits and vegetables.
"I haven't really found anything that would draw me in" to
make many impulse purchases, said Skeer, who lives in Granite