Walmart (NYSE:WMT) stock is in the spotlight today following price hikes for memberships at Sam’s Club, which is owned by the company. Called club members, entry-level Sam’s Club members will now pay $50 per year — up from $45 — while Plus members will pay $110 per year, up from $1o0. This is the first price hike for club members in nine years and the first-ever hike for Plus members since the program started in 1999. These changes will be effective starting Oct. 17. At the same time, the store will be “reimbursing the fee increase in Sam’s Cash” this year.
Sam’s Club memberships are currently hovering near all-time highs across the company’s 600 stores in the U.S. and Puerto Rico. Membership increased by 8.9% year-over-year (YOY) during the second quarter. Meanwhile, same-store sales rose by 9.5%, outperforming Walmart’s U.S. growth of 6.5%.
Sam’s Club has benefitted from heavy markdowns and discounted gas — much like Costco (NASDAQ:COST) — amid the current inflationary environment. For comparison, Costco’s entry-level membership starts at $60 while its “Gold” membership starts at $120.
WMT Stock: Sam’s Club Membership Prices to be Raised
Chief Member and Marketing Officer Ciara Anfield explained that the price hikes are necessary due to Sam’s Club’s heavy investments in recent years. These investments include curbside pickup, same-day delivery and the company’s smartphone app, Scan & Go. Anfield added:
“There’s an expectation that after you invest in this home, it will be worth more […] We’ve made investments and we believe our proposition, our membership is now worth more.”
Today, Walmart also announced that it will take a minority stake in Sustainable Beef in an effort to “expand its supply of Angus beef.” The company did not disclose the monetary value of the investment. Sustainable Beef currently has plans to open a facility in Nebraska which will begin development next month. The facility will create 800 jobs and Walmart will receive a majority of the beef produced there. The facility is expected to produce beef by late 2024.
Walmart is the nation’s largest grocer by revenue and groceries account for 60% of the company’s U.S. sales. Earlier this year, the retailer also invested in Plenty, a company that grows leafy greens indoors close to urban areas. Plenty also utilizes vertical farming, which uses less water and pesticides when compared to traditional farming. By 2030, Walmart has pledged to “protect, restore or more sustainably manage at least 50 million acres of land and 1 million square miles of ocean.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
