Costco Q3 sales jump 8%; ‘lowering prices’ where it can
Costco Wholesale Corp. posted better-than-expected earnings and sales for its third quarter as it continues to emphasize lower prices for its members.
On the company’s earnings call, Costco CEO Ron Vachris spoke about the company’s efforts to mitigate as much of the potential impact on tariffs as it can for its members. These include pulling forward some items that were planned for the summer, sourcing additional locally-produced goods and rerouting goods from sourced from countries with large tariff exposure to its locations in non-U.S. markets.
“We are going to continue to invest in price,” Vachris told analysts. “It’s what we do. It’s how we grow our business. It’s full force ahead on lowering prices where we can."
Executives on the call noted that Costco has been able to lower prices on such items as eggs, butter and olive oil.
Costco reported net income of $1.90 billion, or $4.28 per share, for the quarter ended May 11, compared to $1.68 billion, or $3.78 per share, in the year-ago period. Analysts had expected earnings per share of $4.24.
Net sales increased 8% to $61.96 billion. Total revenue including membership sales was $63.21 billion, also better than expected. Membership fee income grew by 10.4% during the quarter.
Total comparable sales rose 5.7%, with e-commerce comp sales up 14.8%. Comp sales rose 6.6% in the U.S, and 2.9% in Canada. International comps rose 3.2%.
Costco plans to open a total of 27 new warehouses — including three relocations — for a total of 24 net new buildings — by the end of the fiscal year.
The company currently operates 905 warehouses, including 624 in the United States and Puerto Rico, 109 in Canada, 41 in Mexico, 37 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
