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Reading between the lines


Have you noticed lately how discussions of the Sam’s Club business include references to Sam’s international presence? First it was Sam’s president and CEO Brian Cornell during the fourth-quarter conference call when he said, “We continue to see growth in the Sam’s Club brand in our international markets as Doug (international division president and CEO Doug McMillon) and his team opened 14 new Sam’s Clubs this fiscal year. We continue to work with the international team to share best practices across the organization to ensure we’re meeting our members’ need both in the United States and around the world.”

Then, earlier this week at an investor conference in Orlando, Cornell was talking about Sam’s international presence again.

“We now have a significant presence outside the U.S,” Cornell said, referencing Sam’s 139 international units concentrated in China, Mexico and Brazil. “We have more than 100 clubs in Mexico.”

The international connection has even crept into the boiler plate language in Sam’s press releases.

This is all quite curious because Sam’s financial results do not include the performance of the international units, and prior to the arrival of Cornell none of the division’s other CEO’s commented on international because it wasn’t their area of responsibility.

Could that situation be changing? Some type of restructuring to that would have Sam’s International operations reflected in the division’s results could make sense, assuming Wal-Mart Stores Inc. is interested in unlocking the shareholder value that resides in the $50 billion division that ranks as the eighth largest retailer in the United States. Doing so would certainly allow Sam’s to tell a more compelling growth story, especially considering the potential that exists in China and Brazil. Sam’s would then posses multiple growth drivers, a domestic remodeling program and member upgrade cycle being others, that would be appealing to investors should some type of transaction be in the works that would create an alternate ownership structure for Sam’s.

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