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Look out Costco — Sam’s Club is booming amid pandemic

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Walmart-owned Sam’s Club is cementing itself as an undervalued jewel inside of the world's largest retailer. Yahoo Finance’s Brian Sozzi shares the details.

Video Transcript

[MUSIC PLAYING]

MYLES UDLAND: All right, welcome back to "Yahoo Finance Live" on this Monday morning. Brian Sozzi. Guy loves retail more than anything else in this world. Brian Sozzi, you got a story on finance today about Sam's Club. And really interesting to see the maturation within the wholesale space. BJ's became public a couple of years ago. Obviously though, Costco the king here. But you like what you see out of the Sam's Club business?

BRIAN SOZZI: Miles, I don't love it more than you. But I do love the story I have right now on Sam's Club making a comeback on "Yahoo Finance" here. And really, Sam's Club tends to get overshadowed inside of Walmart's results in good reason. The company's name is Walmart. It's not Sam's Club-dot-Inc. But last year, this company did have a strong performance. More people visited stores less, and they filled up their baskets more often when they were in the stores. Sam's Club sales rose about 8%. 8.7% last year. Same-store sales up 11.8%. A really good year.

Now, Costco also is putting up double-digit gains. But let's keep in mind. For the past five years before the pandemic, Sam's Club was just, for the most part, a laggard. Putting up low single-digit same-store sales gains. And you talk to some folks on Wall Street. And they point to a couple of things on what's now going right at Sam's Club. First and foremost, they're finally adding more national brands to their assortment. They added 200 national brands. Brands that people know, like Beyond Meat. They added that to the stores last year. For years, they were overly focused on private label goods to boost profits. That's good for profits, but maybe not necessarily good in driving a lot of consumer awareness.

Next up, Sam's Club has always served as a breeding ground for Walmart's tech initiatives. And they launched, what they call, Scan & Go at gas pumps last fall. Essentially, it's contactless payment at gas pumps. Now, this is in addition to Scan & Go that they launched a couple of years ago in Sam's Club, where you grab an item from the shelves, you scan it, put in your basket, and then you could check right out. Don't have to stop by the register. Consumers are appreciating those type of inventions in a world where we don't want to touch dirty things in retail stores.

And last but not least, the company is now starting to refresh its image. They reimaged, or refurbished, 56 stores last year. They will touch about half of their 600 stores this year with a new look. A new feel. An updated look and feel, which always tends to historically boost sales for retailers. Again, Costco is doing well. They put up double-digit sales gains. But Sam's Club-- 38 years in business-- looks like they're finally getting it right.

MYLES UDLAND: All right, the wholesale wars continue. And it's, I guess, $10 a year cheaper than Costco. So there you go. $45 for a Sam's Club membership.