Walmart to Quadruple Sam's Club Stores in China

Walmart intends to quadruple its Sam's Club stores in China over the next eight years, a media report says.
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Walmart  (WMT) - Get Report reportedly plans to quadruple the number of its Sam’s Club stores in China - to 100 from 26 presently - over the next eight years.

Walmart unveiled the expansion plan at an employee meeting in China on Wednesday, knowledgeable sources told Bloomberg.

The move would represent an ambitious expansion for the Bentonville, Ark., retailing titan and its members-only warehouse division in the wake of the coronavirus pandemic.

But Walmart’s earnings report for the fiscal first quarter, released Tuesday, certainly indicates it has the wherewithal to do it.

Walmart said adjusted profit for the three months ended in April was $1.18 a share, up 4.4% from a year earlier and a nickel ahead of the Wall Street consensus forecast. 

Group revenue rose 8.6% from the year-earlier quarter to $134.6 billion, ahead of analysts' estimates of $131.47 billion.

Sam’s Club stores in China are a bit different from those in the U.S., Bloomberg reports. In the U.S., customers can expect generic goods in huge quantities. But Chinese stores include upscale imported groceries for middle-class consumers.

Revenue has increased faster at Sam’s Club China stores than it has at the 400 Walmart stores with their basic groceries, Bloomberg reports.

Morningstar analyst Zain Akbari is bullish on Walmart long term. But “we suggest investors await a more attractive entry point,” he wrote in a report Tuesday. Akbari pegs Walmart’s fair value at $108.

The stock recently traded at $125.97, up 0.8%. It has climbed 7% in the past three months, compared with a 14% slide for the S&P 500.