Costco reports very Costco-like quarterly results
Costco continued to add new members to its clubs in its first fiscal quarter of 2022, while holding on to the vast majority of existing customers. All that adds up to another quarter in which the warehouse club’s sales and profits were up significantly — exactly what stakeholders have come to expect.
The retailer posted a net sales increase of 16.7 percent, with same-club revenues up 9.9 percent in the U.S. and 8.3 percent in Canada. Costco’s e-commerce sales were up 13.3 percent for the quarter ending Nov. 21.
Costco grew its total club membership to 113.1 million, up from 111.6 million in the previous quarter. The number of its executive members, its highest tier, was up 836,000 from the quarter before.
CFO Richard Galanti rattled off a list of supply chain and inflationary issues that Costco faces on yesterday’s earnings call with analysts.
“Overall, we feel we’ve dealt pretty well with the supply chain challenges in terms of delayed container arrivals on the Pacific Coast,” he said. “About 79 percent of our import containers are late by an average of 51 days.”
He said that the effects are being felt across the store and Costco has engaged in forward buying in some instances to stay ahead of the various factors disrupting supplies.
Mr. Galanti said that some toys and holiday items may not be in clubs in time for Christmas, but that the retailer has “mitigated that as best as possible, and feel pretty good about it.”
He said that Costco, in general, feels good about its in-stock positions.
“Our senior merchant the other day had indicated in his view that his feeling is that we’re better and stocked than anybody out there. And I think part of that is the fact of limited selection, that we are an item business, we could put something else in place or something. But we’ve done a pretty good job,” he said.
Mr. Galanti said he got “a chuckle” recently when a reporter asked him about a cream cheese shortage around the U.S. He said that bagel shops “are being challenged” in finding cream cheese. “It took a little extra work, but we’ve got all the cream cheese we need,” he said. “So I think we’ve done a good job in merchandising.”
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DISCUSSION QUESTIONS: Where do you see the greatest opportunities for Costco to further grow its business in the U.S.? What are its challenges?