Costco’s earnings show it’s still in full retail league
During Costco’s nearly 90-minute earnings call Thursday night, management was asked why it doesn’t offer online ordering for in-store or curbside pickup of groceries and other general merchandise items – a key selling point for other Walmart retailers
“It’s not on our priority list,” said Richard Galanti, the chief financial officer of Costco, which only has in-store pickups for some electronics and jewelry. “Our sales are stronger than ever. We are good at pivoting (should the need ever arise).
Months after the coronavirus pandemic leads consumers to queue outside of its warehouses to stock up on groceries and other items, demand for the largest membership warehouse club remains well above the industry average. In the quarter ending August 30, comparable sales, excluding the impact of gasoline sales and foreign currency translation, jumped nearly 14% in the United States, its largest market with 552 clubs. – warehouses.
More consumers visited stores in the United States, a feat that would be the envy of many of its industry rivals, and they spent more per transaction.
“People feel safe walking in,” Galanti said, adding that customer traffic increased “dramatically” in July and August.
It’s also worth noting that customers were there not only to buy fresh food and other groceries, but also to purchase non-essential items such as patio furniture and outdoor clothing, a trend that Costco is following. expects to last. “We keep more of their dollars even when they go back to dining and other things,” Galanti said.
Worldwide, where Costco has a total of 795 warehouses in countries such as Canada, Spain, Korea and Taiwan, same store sales exceeded 14%. Online sales jumped 91% and would have more than doubled if same-day Instacart grocery delivery was included, Galanti said.
E-commerce sales totaled around 8% of activity (and 10% including deliveries to third parties), compared to 5% a year earlier. Like other retailers, Costco has seen an increase in demand for same-day grocery delivery, while online sales of large and bulky items such as exercise equipment and patio furniture have also increases.
“The outlook continues to be bright for (Costco), and we can’t think of another name that is better prepared to play both offense and defense in today’s fluid environment,” Chuck said. Gordon Haskett analyst Grom in a report. Pricing Costco items at only a 14% to 15% markup above cost is “a strategy that continues to pay dividends,” he said.
The same goes for its treasure hunt environment, which features unusual finds such as Taiwanese mochi sticky rice cake treats.
Total sales for the last quarter rose 12.5% to $52.3 billion. Membership fees increased 5.3% to $1.1 billion as Costco attracted new members and maintained the membership renewal rate in the United States at 91% and in the rest of the world to almost 90%.
Profits jumped 27% to $1.39 billion even as the company spent $281 million on pre-tax costs related to pay rises and remediation costs related to the Covid-19 pandemic. 19. Gross margin widened, in part due to strong demand for fresh groceries that reduced product spoilage, Galanti said.
Costco will continue to pay workers an additional $2 an hour for the first eight weeks of this quarter, the chief financial officer said. He also said the supply of items ranging from meat products to disinfectants is no longer an issue, with disinfectant wipes and latex gloves being the only exceptions.
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