True strength of Sam’s membership trends hard to discern

There was a lot of talk about the favorable membership trends Sam’s Club experienced during the second quarter, thanks to membership and other income that increased 2.5% to $728 million. That prompted Wal-Mart Stores Inc., president and CEO Mike Duke to include Sam’s Club among the list of positive developments he called out regarding the company’s second quarter performance.

“I am also pleased with the momentum in membership income, as Sam’s improves its renewals and upgrades,” Duke said.

Likewise, Sam’s Club president and CEO Brian Cornell characterized growth in membership income on a cash basis as strong adding, “Renewals are increasing at a rate that has exceeded our expectation and outpaced last year’s performance. Our penetration of Plus members continues to grow at a healthy pace. We have seen new signup growth overall, even as small business members continued to struggle in this economy.”

Cornell said membership income increased 1.2%, but didn’t disclose an actual amount.

What would be nice is if Sam’s Club disclosed such metrics as renewal rates, upgrade activity and the number of members at the $100 plus level. Those are the most important indicators of member satisfaction and far more instructive when it comes to understanding members perception of value than a financial figure that obscures true membership activity because it is blended with other income.

Of course, Sam’s is under no obligation to disclose any specifics regarding membership trends and if it wanted could further conceal membership revenues by lumping more stuff into the other income bucket. Either way, it is too bad investors aren’t provided a more thorough picture of Sam’s membership activity so they could form an independent decision about whether trends are as favorable as Cornell contends.