Sam's Club CEO on shopping habits, vaccines and 'disruptive pricing'
At the height of the COVID-19 pandemic, Sam’s Club customers were busy hoarding toilet paper and stocking up on comfort foods like cookies, pizza and potato chips.
CEO Kathryn McLay says that the company called it “the era of carbs and calories," but tells Yahoo Finance Live those buying habits are changing.
“We're seeing this real emergence of people looking for healthy food,” she says. “Our meat counter, our produce, our seafood has done extraordinarily well.”
McLay says members of the retail wholesale club are also spending more on pricier items like snow crab legs and premium ice cream.
Sam’s Club, which is owned and operated by Walmart (WMT), is coming off it’s sixth consecutive quarter of double-digit growth. Same-store sales climbed 7.7% as memberships soared to an all-time high and renewal rates also rose. An annual membership at Sam’s Club costs $45. Membership income grew 12.2% in the last quarter, and the company raised its full-year 2022 guidance.
While foot traffic was up at its stores in Q2, McLay says demand for contactless payments is still high. “Curbside is really a strong, stable growing element of our business, and I think that's going to continue,” she says.
McLay says she’s confident Sam’s Club will have the inventory to meet strong consumer demand, especially around the upcoming Thanksgiving and Christmas holidays. “We have been working through supply chain challenges it feels like for the last 18 months, and it has certainly gotten better,” she says.
“We've had to work to pull forward inventory and to make sure that we are prioritizing that the right freight gets here on time,” she says, adding that Sam’s Club is also working with suppliers to maintain what she calls “disruptive pricing” for its members.
Getting the US vaccinated
Walmart and Sam’s Club have joined the list of major pharmacy retailers offering COVID-19 vaccine booster shots. On Aug. 16, the retailers began making the third shot available to those who are immunocompromised.
In July, Walmart and Sam’s Club mandated employees at their corporate offices be vaccinated, but stopped short of requiring it for frontline workers in stores and distribution centers.
Walmart and Sam's Club recently doubled the cash incentive they are offering associates to get the shot to $150. They are also mandating that all workers wear masks regardless of their vaccination status. McLay declined to say how many of Sam's Club's 36,000 workers are fully vaccinated.
Earlier this month, Delta Air Lines (DAL) became the first Fortune 500 company to raise health insurance premiums for unvaccinated employees by $200 a month to cover higher COVID costs.
When asked if that was something Sam’s Club would consider, McLay says, “I think we're all looking for what is the best way to help ensure that the nation gets vaccinated, and as business leaders we're constantly wrestling with what is the right posture for our organization. So, I applaud them [Delta Air Lines] for trying this, and I think we all need to just be open-minded as to what is going to work the best.”
Alexis Christoforous is an anchor at Yahoo Finance. Follow her on Twitter @AlexisTVNews.
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