Costco sales soar as inflation continues to weigh on consumers

Costco sales soar as inflation continues to weigh on consumers

Costco COST -1.20%

Wholesale Corp. posted higher sales in the most recent quarter, the latest indication that the department store retailer remains a haven for consumers battling ongoing inflation.

Sales of the Issaquah, Wash. incumbent company rose 15% to $72.09 billion in the fourth quarter. The average analyst estimate polled by FactSet was $72.04 billion.

Comparable store sales, which match that of stores and digital channels that have been in business for at least 12 months, were up nearly 14% in the quarter compared to the same period last year. E-commerce sales increased by 7.1% in the same period.

Costco, which specializes in selling discounted bulk commodities to paying members, largely benefited during the Covid-19 pandemic as consumers bought in bulk to limit their outdoor travel, and demand was boosted by government incentives.

The company has remained a popular destination as inflation has depressed consumers’ purchasing power. The consumer price index, which measures what consumers pay for goods and services, rose 8.3% in August from the same period a year ago. The food index rose 11.4% last year, the largest 12-month increase since May 1979, the U.S. Bureau of Labor Statistics said earlier this month.

SHARE YOUR THOUGHTS

How have your Costco shopping habits changed in the past year? Join the conversation below.

Costco posted net income of $1.87 billion, or $4.20 per share, for the quarter ended Aug. 28, up from net income of $1.67 billion, or $3.76 per share, a years earlier. Analysts polled by FactSet were expecting $4.19 per share.

Chief Financial Officer Richard Galanti said the company has no specific plans for an increase in membership fees at this time, but noted that one will happen at some point. “We’ll still have that arrow in our quiver as we go,” Mr. Galanti said.

The decision contrasts with Walmart Inc.’s

moving in August to increase membership prices at the Sam’s Club chain from $50 from $45 for the basic offering and to $110 from $100 for the premium offering. The price increase is the chain’s first in nine years for its basic membership and the first for its premium offering since it debuted in 1999.

“We are aware of the financial strain on wallets right now,” said Sam’s Club Chief Executive Kathryn McLay at the time.

Costco shares fell 2.6% in after-hours trading. The stock closed at $487.17 on Thursday, down 1.2%.

Costco is one of the largest and most successful retailers in the country. In this video, Sarah Nassauer of WSJ dissects the unique way of doing wholesale business. Photo: Qian Weizhong/Zuma Press

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Leave a Reply

Your email address will not be published.