Is Wal-Mart Better Off without Sam’s?

Executives at Sam’s Club and Wal-Mart Stores have put to rest, at least temporarily, speculation regarding the sale of the warehouse club division, while acknowledging the exploration of that possibility is within the board of directors’ fiduciary responsibility to shareholders.

The subject arose several times earlier this month when Wal-Mart hosted the media, analysts, employees and investors for a series of events built around its annual shareholders meeting. During a tour of Sam’s Club’s newest unit in Bentonville, Ark., during a question-and-answer session that followed the shareholders meeting and again during a briefing with analysts, the question was asked about the sale of Sam’s Club. Cfo Tom Schoewe and Sam’s Club president and ceo Doug McMillon took turns answering the question.

“From a real estate, logistics and systems perspective it is very beneficial for Sam’s Club to be part of Wal-Mart,” McMillon told analysts after being asked why the warehouse club division was better off being part of Wal-Mart. “It makes sense to look at these things from time to time and I’m sure we will continue to do so because the question is always going to be there,” he added in a reference to reports earlier this year that the Wal-Mart board had explored a possible sale. “I see a tremendous amount of benefit in what we are currently doing and I hope we are smart enough to take full advantage of it.”

If the shoe was on the other foot and Sam’s Club was not part of Wal-Mart, McMillon said such a scenario would be appealing.

“Imagine Sam’s Club wasn’t part of the company and Lee [Wal-Mart president and ceo Lee Scott] and Tom flew in and said, ‘We are going to make you part of our family. We want to purchase you and we are going to place you right next to our offices. You are going work with our buyers, you will be able to tap into our systems, our real estate and our logistics,’” McMillon said. “I think I would sign up.”

While Sam’s Club benefits from its relationship with Wal-Mart, the lingering question for the company’s shareholders, especially in light of the board’s heightened commitment to their interests, is whether Wal-Mart would be better off without Sam’s Club.