Sam’s Club at Evercore Conference: Growth and Innovation Plans

On Wednesday, 11 June 2025, Sam’s Club, a division of Walmart Inc. (NYSE:WMT), presented at the 5th Annual Evercore ISI Consumer and Retail Conference. Todd Sears, CFO, outlined the company’s ambitious plans to double its business and membership within the next 8-10 years. While the company has experienced significant growth, challenges remain in balancing margin targets with expansion strategies.

Key Takeaways

• Sam’s Club aims to double its business and membership in the next 8-10 years.
• Sales have increased by approximately 50% over the past five years.
• E-commerce sales now account for 17% of total sales, with a 27% growth last quarter.
• New club openings and digital innovations are central to future growth.
• Sam’s Club will continue leveraging Walmart’s infrastructure for efficiency.

Financial Results

• Comp sales rose by 6.7% in the most recent quarter, driven by fresh produce and health & wellness.
• General merchandise sales improved despite slight deflationary pressures.
• Membership has grown by 33% over five years, indicating strong organic growth.
• Delivery sales surged by 160% in the recent quarter, highlighting the success of digital initiatives.

Operational Updates

• Remodeling efforts focus on fresh produce and enhancing e-commerce capabilities.
• Plans to open 30 new clubs in the next five years, with a pipeline for 15 clubs annually.
• Sushi offerings have expanded, now available in 581 out of 600 clubs.
• Scan & Go technology accounts for 35% of sales, showcasing digital integration.
• The supply chain is merging with Walmart’s to improve cost efficiency.

Future Outlook

• The primary goal is to double the business within 8-10 years through organic growth.
• Expansion plans include new club openings and enhancing digital presence.
• Sam’s Club will continue to leverage Walmart’s resources for accelerated growth.

Q&A Highlights

• The focus is on maintaining current margins while reinvesting in growth.
• Being part of Walmart provides substantial benefits, such as technology and infrastructure support.
• AI innovations, including autonomous floor scrubbers, are being implemented to optimize operations.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - 5th Annual Evercore ISI Consumer and Retail Conference:

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Well, good morning, everyone, to the day of our consumer and retail conference here for Evercore. I’m Greg Malek. I’m the retail broadlines and hardlines analyst. And it’s my pleasure to have with me this morning Todd Sears, who is a Senior Vice President and Chief financial officer of Sam’s Club, but spent over a decade at Walmart working a lot international. So I know you’ve been at Sam’s Club for now, maybe a little over a year.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Just over a year, yeah.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: So a lot of excitement and change going on there and acceleration growth. So Todd, thanks for joining us and look forward to the discussion.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: My pleasure. I’m looking forward to it.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Great. So let’s kick it off. Could you just give us a brief history and overview of Sam’s Club that we saw from the video, but maybe position that now as to where you’re seeing the consumer in general and your member.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. The video I think did a good job of providing a really big overview. One thing I would add, in the last five years, really at the start of the COVID pandemic, which was the shot of adrenaline of growth, we’ve grown about 50%. And still with the same number of clubs, that is a tremendous amount of growth in retail over a a five year period. And it’s that momentum that we have built, we believe the future is still very bright to be able to continue to grow at that pace.

In terms of consumer, what we’re seeing right now is the consumer is still being very conscious and very choiceful about what they’re purchasing, but it’s been consistent. And I’ll use that word consistent because the last eight plus quarters, the behavior’s been pretty much the exact same. And it really goes back to 2022 when we saw double digit inflation in food. And we at that time, we saw members make choices to come out of general merchandise or nondiscretionary nondiscretionary categories into food. Even though food inflation’s come down, food prices are still elevated.

Mhmm. And so the members are still making those same choices. But in terms of of behavior, it’s it’s been the same. The one other piece that we’ve seen a trend, and this trend has only increased, is they’re also really prioritizing convenience. So anything we give them to make the experience in club better or the online experience better they’re leaning into.

And so they’re they’re doing those two things.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: You know, maybe to pivot that just more recently, you could talk about the comp trends you’ve seen in the box and which categories are doing better and, you know, general merchandise and how’s that work?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. The last most recent quarter, we we had a six seven comp, which I I feel is pretty healthy in retail. That was definitely led by fresh, which is produce. Think meat, fruit, vegetables, those types of things, and also health and wellness. Health and wellness is has been growing double digits for for quite some time now.

However, general merchandise was also positive, which is pretty encouraging. In fact, it was the quarter in a row that we saw positive general merchandise comps. And during that time, we even saw a little bit of deflation on what we sell. And so the unit growth to get a positive comp was even higher than the comp growth. And so it’s a combination of those things, but really the last two or three years for sure fresh and health and wellness have had double digit plus growth pretty consistently.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: That’s driving some pretty powerful, not just the last couple quarters, but I know over the last six years. I just looked at the table, you’re you’re if we rank our 28 retailers, there’s basically Amazon, Costco, and Sam’s Club with the best six year compounded growth. So it is showing up in both traffic and ticket. So Yes. We can see that in numbers not just near term but even over the last few years.

Guess to double click on that, how are you guys managing the tariff and costs input side of this equation to try and keep that shocking value equation for for consumers?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. I keeping prices low is not new for us. That’s part of our DNA. In fact, our financial model is to keep prices so low that we just barely cover our costs. And we can do that because most of our profit comes from membership income.

In fact, 80 to 90%. And so we’ve always strived to keep prices low. And the way you do that is supply chain management, manufacturing out costs, looking at the best countries to source. And so everything we’re doing right now to keep prices low are the same things we’ve always done. It’s just a little bit bit different context

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: But the environment is is very similar.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And on tariffs specifically, what how do you manage through what what that could do?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. Well, we have the best merchants in the world. We’re forecasting demand and making the purchases necessary. We’re also being very strategic on particular items, and you’ve heard others in retail talk about pineapples and bananas.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Right? We also have not raised prices on pineapples and bananas even though we have to import them.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And one of the things that we’ve done is we’ve been able to reduce spoilage and waste, which allows us to offset any of those cost increases. Another example that I’ll share, and I I think this gives good color and context is at Mother’s Day, we kept prices of flowers the same. We did not increase them, but the best roses in the world come from Ecuador and Colombia. And so you have to import them. And we worked with our growers there and collectively, we decided, hey, we can reduce costs and cut out costs if we shift the packaging of these flowers to The US.

And so because we did that, that allowed us enough flexibility to not raise prices and we were rewarded with by far our highest flower sales weekend we’ve ever had. And some people would say that’s kind of a luxury item. That’s not a necessity, but at least in my house, flowers on Mother’s Day were an essential item and I was grateful that that we were able to keep the prices the same.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Well played, Todd. I’m with you on that. So maybe to pivot there, mean, Sam’s has outlined a pretty ambitious growth plan Yeah. And some acceleration. Could you, you know, talk about, you know, how you’re gonna it was forty years to double sales and membership and now trying to do it in, you know, half that time.

What what’s what are the

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: was a couple months ago, we came out publicly and said we have an ambition to to double the business, double membership in the next eight to ten years.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Wow.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And that’s that’s a big ambition. We know it’s not easy. Yeah. But, Sam Walton, I think, his quote that is is famous says, high expectations are the key to everything. And that’s the expectation we have for ourselves.

And and so that’s what we’re going after. Just a little bit of context, when we started this growth journey five years ago, yes, sales have grown 50% in that time, but one thing that’s really interesting is our member base grew 33%

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Okay.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: During that same time. Mhmm. And so and and that was you know this, but for everyone’s context, that was with the same number of clubs that we have today. So that’s what I would call purely organic growth. Wow.

And just adding members and that comes through with us delivering on our our member value proposition. We will continue to grow organically Mhmm. Throughout this time period. I think the one of the big things we’re doing to make sure we can continue to grow organically is we’re remodeling all of our clubs. We want that consistent elevated experience throughout and that will help propel that.

But with this growth, we also know now is the right time to start growing physically again and extending our physical reach and we will be building new clubs. And with new clubs comes more members and comes growth as you know in retail. But also, the way we’re gonna grow is our digital reach continuing to get better and better. And by digital, I mean, really our ecommerce offering, our omni offering. And the beautiful thing about that is that makes it so you don’t have to live near a physical club to enjoy the value of a membership.

And so looking at all of those all of those three components is is how we have the confidence that we can actually go about this pretty bold ambition.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Maybe I’d I’d love to unpack each of those three growth areas a little bit more. So remodeling the clubs. When a remodel happens, what are the biggest changes that as a member I would see?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. So I talked about how fresh has really led the business and and fresh is so important in retail because it is is a traffic driver. It’s where the member assesses quality immediately, and they can tell that difference. And so in a lot of clubs, we’ve already remodeled our fresh area, but those we have not, we needed to get it up to the same standard that we have in our best clubs around Fresh. So that will be key.

The other component is over half of our sales, ecommerce sales, are fulfilled from clubs. All of our clubs were built before any of that happens. Right? And so some of the some elements of the club need to be retrofitted to enable our ecommerce growth, which is really, when you think about it, that’s omni by definition is we’re using these physical clubs to really drive drive e commerce. And so there’s gonna be a combination of those things.

And, of course, anytime you do a remodel, there’s there’s just big maintenance items that that need to be done. We’ll take care of all of those at the same time.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And and and I mean, I saw it last week in the club that the fresh cut sushi, I mean, is that that’s in every club now?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: We have sushi in 581 exactly of our 600 clubs. And it is a and each one of those comes with a a sushi chef. Mhmm. And the goal is when we remodel that sushi chef, this is a tongue twister.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: That’s right.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Should be, front and center and it adds this theater. Sushi is a it is it is a big traffic driver. One of the reasons why people come all the time and the quality of it is excellent.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Yeah. I know for under $10, there’s a whole plate of sushi and a whole prepared meal. So I I could see that continuing. Maybe other growth areas, remodel the clubs but also growing physically. Sort of take us through, you know, how many clubs, how quickly you can put them up.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. It was our investor conference we did in fiscal year twenty twenty four where we announced we would open 30 clubs over the next five years. Mhmm. Now at that time, we had we were just starting the pipeline. And as you know, in real estate, it takes a while to build up a pipeline and get going.

And so but right now, we are on track to open those 30 clubs by f y twenty nine. We will open a club in a couple of months in Arizona that we’re very excited about, another one later in the year, more the year after that, etcetera. But we also just announced a couple of months ago that we’re not gonna stop there. We see a lot of opportunity in The US to continue to have a club presence. And as we build up this pipeline for the 30, we are also building a pipeline to reach a point where we will be able to open 15 clubs a year on a foreseeable basis.

It’s gonna take quite a while till we completely saturate those opportunities.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And and I guess when you’re doing that and you’re running the IRRs on each of those sites, how many members per club do you expect to hit those IRR targets?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. As you know, we don’t disclose member counts. So that’s a good try. The the way I view it, the context I’ll give you is if I look at our average member base per club today Mhmm. Any new club we approve and we allocate capital towards, I wanna make sure that there is an good enough addressable market in that area where I can achieve that today’s average in early on in the cycle of that new club.

Think year three, year four, something along those lines. And that’s important because there’s so many different opportunities for us to invest. I’m not going to allow us to invest in a place where we can’t have that membership base. Because it would just take away from a place where we could. And so as we go through capital allocation decisions and and deciding where we want to go look for sites, that plays a a big role.

One thing that is important about Sam’s Club is our ROI is accretive to Walmart Inc.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: so as we’re investing in remodels, as we’re investing in new clubs, my job is to make sure that it stays that way. And so I look for, okay, how do we continue to play our role to have an accretive ROI to Walmart?

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Oh, I really wanna go down that path. I I will follow-up on that. So so one thing that is is Mart has really taken off in tech and gotten new businesses driving that momentum, we’ve seen a real margin inflection from the density of delivery and advertising, etc. So these are our numbers. We think that Wal Mart U.

S. Could be at a 6% margin in about five years with fifteen, twenty bps of tailwind. That said, Sam’s the nature of the model high turn, lower margin.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Does that mean that Walmart’s enterprise margin should we as analysts be thinking the enterprise margin will always have to be, you know, 50 bps lower than because of Sam’s? And I’m not saying you shouldn’t grow the clubs. I want you to. But will it always be lower? But how do you think about

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: that I’m talking about the Sam’s margin. Maybe I’ll have Steph chime in on the enterprise piece. You mentioned the model that we run on the on the club side, and this was the original model Sam Walton talked about, which was high sales, low GP, equally low SG and A, low operating margin, but high ROI. And we’re true to that model today. As we do different things, as we build new clubs, as we get more members, we may see our operating margin tick up a little bit, but we are not intending to we’re we’re we’re actually intending to preserve margin, not meaningfully expand it.

And we think because of how many investment opportunities there are, that that’s the best thing to do for the long term. Steph, do you wanna chime in on on the Walmart Inc. Side?

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: We have the mic.

Steph, Unidentified, Walmart Inc.: It’s a good question. I think at the enterprise level, we step back and think about sales margins and returns. And across the portfolio of Walmart U. S, Sam’s Club U. S, and international you’ll have different contributors to each of those buckets.

And Sam’s we know is structurally a lower margin rate but there are offsets within the portfolio in Walmart U. S. And international that can help lift that overall enterprise margin. So we don’t see any inhibitors to driving that kind of expansion that you talked about. Sam’s can be a contributor to the rate of growth even though it has a structurally lower margin.

And we wouldn’t want to change that to Todd’s point. We want to think about the portfolio overall when we think about driving overall enterprise margin expansion.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And just to be clear while I ask you on that stuff, so you guys are still targeting a growth algo as opposed to some sort of margin target.

Steph, Unidentified, Walmart Inc.: Excellent Thank

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: you. That feels good. We don’t like the margin target. We like the growth. So pivoting back to the growth initiatives, I guess digital reach.

So I want to almost double click or triple click on that because it’s been such a transformation, not just at Walmart, but really at Sam’s. So maybe take us through the momentum that you’re seeing in digital engagement at Sam’s Club and and how you take it to the next level.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. So let me just set the context a little bit. We believe the future of club retail is omni. And so that’s why we’re investing heavily in omni. And by omni, you you can’t be an omni club unless you’re a digital.

And and digital in our context is multifaceted. So let me let me address the in club experience which is we know about Scan and Go. What you may not realize, I was kinda surprised by this, is Scan and Go was launched in 02/2016. It’s almost ten years old. Next year will be the ten year birthday of of Scan and Go.

And yet still, in the most recent quarter, Scanigo was 35% of sales, and that was up 600 basis points year over year. That is tremendous growth in a technology now that’s nine years old. And then additional additionally with digital, I would view our Just Go exit arches as also being digital using technology to improve that in club experience. As we look at Omni, really what we’re trying to say is we want our members to choose how, where, and when they shop, and that includes in club. But of course, to do that, you also have to have a big ecommerce presence.

Today, our ecommerce business is 17% of sales excluding fuel, and that was up 300 bps in a year. That’s pretty good growth when you think about the total mix. And it grew 27% last quarter and it’s been growing in the twenties for for quite a few quarters in a row. With e comm, we offer curbside pickup. We offer delivery, including fast delivery through express and also shipping from from fulfillment centers.

Curbside pickup and shipping have been growing pretty consistently for a number of years. However, delivery has been what’s really taken off as of late. Just in the last quarter, delivery grew a 160%. And it wasn’t a huge base, but it also wasn’t a tiny base. And the amount of momentum we have in delivery just continues to get faster and faster and faster.

And it’s the members telling us they want things faster. They want it how they want it. They want it on their doorstep. But we also have positive comps when we just look at in club shopping also. And so when you have this total omni offering, again, it’s allowing the members to choose how, where, and when they want to shop.

It all kinda works together.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: So that 17% e commerce, the bulk of it is still curbside?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: The biggest piece is curbside, but the fastest growing for sure is

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: the the the in between the bucket would be going direct last month.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. Shipping straight from a fulfillment center.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: From a fulfillment center. And on that delivery, I guess pizzas are

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. It’s Pretty cool. This is kinda interesting. We’ve we’ve sold hot pizzas in our cafes for a long time.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And they’re large. Like, you can get an entire large pizza for the cost of a slice down the street. Right?

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: New York for sure. Yeah.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And we had this idea like, hey, we’re doing so much in delivery. Why don’t we start delivering pizzas? Can we even do it? This is a funny story, but we tested it just with some associates and the pizza we delivered actually ended up being a rotisserie chicken. And so it showed up at this associate’s house and it’s like, he took a picture of it and sent it in like, this is a pretty good looking pizza.

Mhmm. Thank goodness there was an associate that was part of our test. We quickly got that corrected and now we’re delivering actual pizzas.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Right.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Not just chickens. We also deliver rotisserie chickens by the way. But the the pizza delivery has been incredible and has exceeded our expectations. Meaning, we quickly rolled it out to all 600 clubs. What’s surprising is the average order value of a pizza order is 10 times the price of the pizza.

So people are adding other things to the basket. The other thing that is interesting is that a significant percentage of the total orders, members are choosing to pay for it, pay for delivery through express. They want the faster delivery. And so the value on the pizza is so big, they’re willing to pay that extra money to have it delivered that much faster. And here’s the most interesting thing to me as a CFO is quite a few of the members who choose pizza delivery or delivery through express.

This is the time they’ve done delivery or express. And so pizza is introducing members to these channels and we’ve learned on the Walmart side, when they get introduced to these channels, they don’t go back.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Got it.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: It’s the same thing as Scan When someone uses Scan and Go, they don’t go back. And so the the trick is how do you get people into these channels and pizza is serving that role for us and has been very effective. It’s only like two months old, but it’s been very effective so far.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And unlock the entire box of SKUs, is something, and no offense to Domino’s if they’re here later today, I’m not sure, but you know, they can’t bring you the rest of the box with the pizza. I guess going a little bit further now on that innovation and the technology’s gone on the story, you mentioned Scan and Go, been around for ten years. What’s been the inflection, If you look across all the different initiatives, what’s you talk about delivery, but what’s the inflection of that really is driving that loyalty and traffic and membership increase?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: I think, you know, we’ve really invested heavily and focused on improving convenience and improving experience.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Convenience.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And every trend we see with consumers is they want that. Both our members but also just more broadly in whatever country Walmart operates in or even here just in The US and so and we think we provide the most convenient and best experience in the channel. Members told us a long time ago they hate waiting in lines. Like, news flash, right?

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Right.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And that’s why we introduced Scan and Go. COVID accelerated Scan and Go because everyone was concerned about that human to human contact and then it’s just continued since then. But then members kept telling us they didn’t like to, they love skipping the line at checkout.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: But they didn’t like to wait in line to get the receipts checked at the door. Right. And the reason why we checked receipts is because this is a club model. We wanna keep prices so low and so it’s just making sure you know what’s leaving the door from a shrink standpoint. But we said, hey, how do we use computer vision which we already had in other parts of the club to take away that manual check?

And so that’s where we came up with the idea, developed and installed the Just Go Exit Tech, the computer vision Exit Tech in about a year’s time. Wow. Moved really really fast. A couple interesting data points that I’ll I’ll share on that just go exit tech. An associate at the door historically would have checked three to four items manually on average.

The computer vision on average is able to check seven. So twice as many and it’s it’s almost all of them and you think about average basket sizes and and whatever else. But that’s twice as many. Since we’ve done that, we have identified an increase in 17% or 17% higher unpaid item detection through computer vision than we did with manual checks.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: It helps shrink.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: It helps shrink. The great thing about that is the vast majority of cases is accidental. Right. The members felt horrible about it. Right.

In fact, the the way we treated them actually increased the loyalty. Because of how we treat them with kindness and and and all of that. But it’s it’s a win win win. It’s a win for shrink. It’s a win for the member and it’s actually a win for the associate.

The 75% of the members are now going through these exit arches without having to have their receipt manually checked. There’s a few things that are complicated where we have to check it like anytime anyone buys alcohol, of course that’s gonna trigger a manual check and there’s there’s some other things that are complicated. 75% is a lot and what that does is for all members, from the time they check out to the time they leave the door is faster. Right? Because there’s no line or the line is a lot shorter and it’s moving faster and so listening to members has taught us where to invest Mhmm.

Where to lean into tech and improve that experience.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And so, I’ll frame it now. How many members are checking out with Scan and Go and what what are we up to there now?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: That’s at 35%. That’s the

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: 35. Yeah. Now that you have these exit systems, do you get rid of the cash registers or reduce the number of cash registers existing clubs? We saw in grapevine Yeah. That they they’re not even there.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: So yeah, you’ve been to our grapevine club and for context, we’re talking about grapevine because it was a club that we had that got destroyed by a tornado and we ended up rebuilding it and reopening it last October. And when we reopened it, having done a lot of research with the community, we opened it with no cash registers.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Okay.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And what was great is when we took out all the space for cash registers, it allowed us to put more general merchandise in it which the members also like in And the good thing is the NPS on scan and go specifically in the grapevine club is at or higher than the chain average for scan and go. And so one of the reasons why that’s the case is because we took all those associates who were manning cash registers that had a physical barrier of the belt in between them and the member. We removed that barrier and now they’re engaging with the member. They’re teaching them how to set up scan and go, how to use it. It’s been a great experience.

On opening day, I was there and I there was a couple probably in their seventies who couldn’t figure out how to do it. And so I approached them and literally, the the guy handed me his wallet, his credit card, his phone. I could have taken off and run away. But I typed in his credit card and the smile he got on his face when he scanned and was able to just slide his finger and check out, like it was it was priceless.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Yeah.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: That happens every single day in that club. I think because we took a group of investors to that club, we were probably, there’s probably a misperception that we’ve already committed to taking all registers out of all clubs. Okay. We have not decided that yet. As we remodel clubs, just like we did in Grapevine, we will look at the member base, we will talk to them, we will look at the environment and we will make those decisions.

Certainly, there will be members in some areas and membership bases in some areas that will require some registers. I also think if we fast forward into the future, if you go far enough, there probably is no register. Right. It’s just a matter of timing and how you navigate through that.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Got it. And the scan and right. Once you have scan and go and you have this, you just walk right out. Get rid of all the pain points. I guess given your your background international, from that experience, what have you learned or or what things have really jumped out to you that you’re trying to apply that where Sam’s Club in The US could learn from around the world?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. So I we talked about I’ve been in this role for just over a year. I came from our international segment and I’ve worked a lot of my time at Walmart in international. We have and we didn’t mention this, we have Sam’s Clubs in China and we have Sam’s Clubs in Mexico. But they report up to our international segment, not to Sam’s Club However, we work, we stay very close to those leadership teams.

In fact, just last week, we had leaders from Sam’s China and Sam’s Mexico in our building. We’re sharing best practices. We’re learning. We’re trying to solve problems together. We’re constantly talking.

We share similar brand standards. We share sourcing. We share similar strategies and it it’s been very beneficial. I think we were just talking a little bit before this. Sam’s China, we we’ve learned a lot from particularly around the omni channel side.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: They have the e commerce side of their business is about 50% right now is my understanding. And that’s really significant and they’ve figured out, okay, how do you handle that much volume in your clubs? What do you do? How do you still maintain a positive experience in the club when you have all these things? And we’re only at 17%.

They’re at 50. We will probably eventually get there someday. And having an example where we can share ideas and think about, just makes it a little bit easier. There’s a little bit less r and d on our end because we can we can share with them.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: And those learnings. But you said even a lot of others is the purchasing linked or you’re able to leverage the scale of Sam’s or is it still merchants in each No.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: There’s merchant teams in each market but we have a global sourcing team that helps facilitate. There’s members market in each of those markets.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Right.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: There are some sharing of of products. But generally, we’ve also learned that local assortment is is very effective.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Got it. If if, could Sam’s grow faster if it was separated from Walmart?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: That’s really good question. Here’s one of the ways I look at it is, I believe one of our biggest differentiators and what strategically is because we are part of Walmart. And that has allowed us to grow at the pace that we are and innovate and move with speed that we do. And the reason for that is because we can leverage the whole of the enterprise quite a bit. A couple of examples that I’ll give is about a year ago, we announced we were merging the Sam’s Club supply chain with the Walmart US supply chain.

And the primary reason for that is it’s really expensive to build a supply chain. Mhmm. A world class supply chain. And Walmart had that. Ours was pretty good but we had already built it.

I would say we, Walmart Inc had already built it and some of you have visited our fully automated fulfillment centers. They cost a lot of money. Mhmm. And now we have Sam’s Club inventory in them and we’re able to as an enterprise leverage that asset even more. The reason one of the reasons why delivery is growing so fast is because we leverage the Walmart Spark driver network that they already built, they already set up.

And so we didn’t have to build all that infrastructure. More recently, we’ve started leveraging the real estate function at Walmart specifically on the facilities maintenance side. They have a lot of buildings across The US. We have 600.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Mhmm.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And so for them to be able to, they already have economies of scale and are able to more effectively and efficiently help maintain our facilities and of course, we’ve talked, we haven’t today, but we always talk about leveraging tech,

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: right?

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: In fact, right now, our ecom app is undergoing a migration to the same platform that the Walmart app is using. Mhmm. We started rolling it out a couple of weeks ago, quite a few members already have it. All of our members will have it in a couple of months and the reason why that’s important is because once we have the same platform, we can then leverage all the tools and capabilities that Walmart’s already built within the Sam’s app. Today, it’s harder for me to do that.

Now, I’ll give you an example. Yeah. While delivery grew a 160%, if you place a delivery order and you said, I forgot that I wanted to buy ketchup. Right. The only way you can do it is to place another delivery order or to cancel the order, go add every all the same stuff to your basket and add ketchup this time.

That’s painful. Yeah. No one wants to do that. On the Walmart side, we’ve already built the tool and the capability where until it leaves to deliver, you can just incrementally add or change your order. Once we’ll be on this common platform and we start integrating those tools and those features, we’ll be able to have all those same things that the Walmart side has.

The beauty of that is most of our members are, they shop at Walmart too. Right. And they’re already used to being trained on that app and so the way we can scale and move faster is is a result of being part of Walmart and I would be concerned, it would it would just be harder as a stand alone company. The capital cost would be higher, the development lead time would be a little bit longer and so I think we’re in an optimal position. Steph, do you want to add anything to that from an enterprise lens?

Steph, Unidentified, Walmart Inc.: No, I think you’ve summed it up well.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: So definitely want to stay part of Walmart. That said, are parts of Walmart like Walmex that have benefited from having a publicly traded equity board in the country. Talked about Flipkart and PhonePe, I think, in the past as areas around the world that you know intimately. I checked, the Nasdaq still has the ticker s a m s. Still has it.

It still has it. You can get Sam’s as long as you’re Nasdaq. I think Sam Adams has the anyway, so you can still be part of Walmart, but would there be any benefit to actually being at least separated in that regard so that people could buy in associates at Sam’s Club could buy in the Sam’s Equity? I’m just still thinking, it’s still ringing in my ears, the Sam’s Club associates cheering last Friday endlessly. Jimmy Fallon couldn’t talk for two minutes, it was so loud.

So I’m rambling a bit here, but I guess, how about from that side of it? Not about leveraging the technology, but is there another angle on that? And feel free to.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: I’m sure Steph will jump in on this too. One of the reasons why that would be appealing to me is for additional capital. Mhmm. But I don’t need that because I’ve never been rejected for a capital request. And so I don’t have that incentive.

Steph, do you have anything else to add?

Steph, Unidentified, Walmart Inc.: Only thing I’d add to that is this is something that we evaluate through our process on a continuous basis. So it’s not a new or novel concept.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Okay.

Steph, Unidentified, Walmart Inc.: But I think to Todd’s response, there’s value in being part of the enterprise and the entity, But it’s our duty to continue to evaluate all of the assets that we have, business assets and infrastructural assets, to make sure we’re optimizing value for the shareholder.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: That’s great. Thank you. I’ll keep trying, but I’ll. The, I guess, just tie it together, we talked a lot about growth and the acceleration, technology, and how that AI is comes up in just about every meeting. So maybe more specifically, how are you guys using artificial intelligence to help your member experience and and partake in this growth?

Is there any examples you could

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Yeah. I mean the classic example and this is a little bit older AI, but I’m of back ages ago when the US postal service started using machines to scan zip codes. They called that AI at the time. Mhmm. Which is it’s interesting how things have evolved.

We’ve talked historically about our autonomous floor scrubbers.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Okay.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: And they don’t have people on them. They go around, they clean our clubs, they clean the floors. And at one point, we got the idea, why don’t we throw cameras on them? This is when we started getting into computer vision. We put cameras on them and RFID readers.

Those scrubbers today take 23,000,000 pictures a day across our clubs. We throw that into a machine and it’s AI that’s analyzing those pictures and it’s doing two things. One is, it’s identifying when inventory on the floor might be getting low. Our associates don’t have to go around and look, they’re getting signals straight through their phones, through their apps say, hey, your paper towels are are running short, time to put out another pallet. The pictures are also looking what we say up in the steel.

So in the club, if you look up, that’s where we store all of our inventory. There is no backroom. Mhmm. But there’s not like on the floor we know where things are at but up in the steel we don’t. Basically, we put the pallets wherever they fit.

And so the autonomous floor scrubbers, the pictures they’re taking is also up in the steel and they will identify where the inventory is. Historically, an associate would have to walk around with a clipboard and be looking up getting neck pains and identifying where the inventory was. Today, they know where it is because we’re using these pictures AI analyzing it and telling us where it’s at. Mhmm. That’s one example related to AI.

We have a lot of things that we’re working on. I’m not going to talk about them because everyone wants to know what we’re doing and we think we’re on to a few things. We’re being very front footed though. Okay. And I think what makes me most excited is things that we could only imagine in the past, AI will make a reality.

It’s just a matter of time in getting some of those things implemented and done. I’m very excited about AI will do to the entire club experience.

Greg Malek, Retail Broadlines and Hardlines Analyst, Evercore: Well, that’s I think the perfect way to end because we’ve got you still here for a few more hours. I really appreciate it Todd. Thanks for the time and we’ll follow-up over the course of the day.

Todd Sears, Senior Vice President and Chief Financial Officer, Sam’s Club: Thank you. Thanks.

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