Costco currently operates 848 warehouses, including 584 in the United States.
Costco Wholesale Corp. posted second-quarter earnings that beat Street estimates as it joined other retailers in noting softening discretionary sales.
On the company’s earnings call, CFO Richard Galenti noted that, during the second quarter, Costco opened three new warehouses, two in the U.S. and one in Australia. Next week, it will open its third location in China, with two additional outposts scheduled to open in the fourth quarter.
Costco expects to open 24 new warehouses in its current fiscal year, which includes 14 U.S. locations. In addition to China, Costco’s new international include its first-ever stores in New Zealand and Sweden, both of which opened during its first quarter. Galenti told investors that the company’s estimate for its fiscal 2023 capital spend remains in the range of $3.8 billion to $4.2 billion.
Net income totaled $1.466 billion, or $3.30 per share, for the quarter ended Feb. 12, compared with $1.299 billion, or $2.92 a share, in the year-ago quarter. Analysts had expected earnings per share of $3.21.
Total sales rose 6.5%, to $54.24 billion for the quarter, from $50.94 billion last year, missing Street estimates of $55.54 billion. Traffic or shopping frequency increased 5% worldwide and 3.7% in the United States
Galanti said Costco has seen some “weakness” in big-ticket discretionary items.”Declining sales in product categories such as apparel, electronics and jewelry were offset by strength in fresh food, food and miscellaneous categories. Both Target and Walmart have also benefitted from increased spending in food as discretionary spending weakens.
Costco’s total company comparable sales during the quarter rose 5.2% (adjusted comp sales excluding the impact from changes in gas prices and foreign exchange rose 6.8%.) Total U.S. comp sales increased 5.7%; adjusted U.S. comp sales rose 5.8%. Total e-commerce comp sales fell 9.6%.
For the month of February, Costco reported net sales of $17.06 billion, a 4.7% rise from the same month last year.
Costco noted that Lunar New Year/Chinese New Year occurred on January 22, 10 days earlier this year. The shift positively impacted February’s other International and total Company sales by approximately 2% and 0.25%, respectively.
Costco currently operates 848 warehouses, including 584 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.