Costco to open 24 new stores; Q1 sales up 8.1%
Costco Wholesale Club reported first-quarter sales and earnings that missed Street estimates as it deals with inflation and higher operating expenses.
The membership warehouse club retailer plans to open a total of 24 new stores in its current fiscal year, including 15 in the U.S., CFO Richard Galanti said on the company’s earnings call. The chain’s nine international openings include its third and fourth clubs in China.
Costco is also adding more warehouse space. It has 27 openings planned for the year, with three relocations and 24 new locations. The retailer opened seven net new warehouses in its first quarter, including four in the U.S., and one in Korea. It also opened its first-ever warehouses in New Zealand and Sweden.
Capital expenditures for the year are expected to fall somewhere in the $3.8 billion to $4.0 range.
Net income totaled $1.364 billion, or $3.07 per share, in the quarter ended Nov. 20, compared to $1.324 billion, $2.98 per share, in the year-ago quarter. This year’s results included a charge of $93 million pre-tax, $0.15 per share, primarily related to downsizing Costco’s charter shipping activities.
“The strength of the U.S. dollar resulted in our foreign company earnings translating into fewer U.S. dollars,” Galanti said. “With 25% to 30% of our earnings generated outside of the United States, this negatively impacted earnings by about 12 cents per share.”
Merchandise costs rose about 9% to $47.77 billion amid higher freight and labor costs.
Net sales increased 8.1% to $53.44 billion, from $49.42 billion last year. Analysts had expected sales of $54.64 billion.
Total comparable sales rose 6%, rising 9.3% in the U.S. and 2.4% in Canada, and falling 3.1% internationally. Adjusted to exclude the impacts from changes in gasoline prices and foreign exchange, total comp sales rose 7.1%, and were up 6.5% in the U.S.
Costco’s membership fee income came in at $1 billion, 5.7% higher than last year's reported number of $946 million.
Costco currently operates 847 warehouses, including 583 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, two each in France and China, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.