Costco Q1 sales miss amid Thanksgiving web site snafu; earnings top Street
A website outage that occurred over Thanksgiving weekend took a bite out of Costco Wholesale’s first quarter sales.
The retail giant reported earnings of $844 million, or $1.90 a share, for the quarter ended Nov. 24, compared to $767 million, or $1.73 per diluted share, last year. Analysts were expecting $1.71 a share.
Net sales rose 5.6% to $36.24 billion, below estimates of $39.9 billion, up from $34.31 billion a year ago. Same-store sales in the U.S. rose 4.7%. E-commerce sales rose 5.5%, compared to a 19.8% increase in its fourth quarter.
Costco noted that the late Thanksgiving pushed early holiday sales off to the next quarter and took12 percentage points off e-commerce sales. The retailer also was hit with website failure on Thanksgiving.
“It was unfortunate, despite all the efforts to have plenty of capacity —- processing capacity, if you will — there was something that incurred," Costco CFO Richard Galanti said on the company’s quarterly earnings call. "When we look at the five days between Thanksgiving and Monday — Cyber Monday those five days on a year-over-year basis. I mean, we still were up in the very high teens as a percentage on e-commerce. So consistent with what we've showed you — what we have currently been running what tells us we could have done better than that. So we did leave something on the table there.”
Galanti noted that the company is continuing to invest in technology.
"Rest assured, we're spending a lot of money on things like that,” he added.
Costco currently operates 785 warehouses, including 546 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, and Japan.