Costco Wholesale Corp. ended a strong year on an even stronger note, topping the $60 billion mark in quarterly net sales for the first time in its history. In another first, its annual profit hit $5 billion, growing at its fastest rate in more than 20 years,
The membership warehouse retailer reported that its fourth-quarter net sales rose 17.5% to $61.44 billion, just topping estimates of $61.41 billion, compared to $53.38 billion last year. Total comparable sales rose 15.5%.
Earnings totaled $1.67 billion, or $3.76 a share, in the quarter ended Aug. 29, up from $3.51 a share in the year-ago period. Analysts had expected earnings of $3.58 a share.
For the full year, Costco’s net sales increased 17.7% to $192.05 billion from $163.22 billion in the prior year. It was the largest year-over-year growth for Costco since its 1992 fiscal year.
Net income rose more than 25% to $5.01 billion from $4 billion, a record earnings total for Costco. It was the largest annual growth in profit since 1998, according to FactSet records, reported Marketwatch.
On the company’s earnings call, CFO Richard Galanti said that port delays, container shortages, COVID disruptions, shortages on various components, labor cost pressures and trucker and driver shortages are all putting pressure on supply chains and inflation. To ensure it gets what it needs, the company is placing orders earlier.
“So planning is crucial, which I feel our people have done a great job with over the last several months,” he told analysts. “Also, we're putting some limitations on key items, like bath tissues, roll towels, Kirkland Signature water, high-demand cleaning-related SKUs.”
Galanti noted that containers, trucks and drivers all are impacting the timing of deliveries and higher freight costs. Despite all these issues, Costco continues to work to mitigate cost increases in a variety of different ways and hold down and/or mitigate price increases passed on to the members,” he added.
“We've also chartered three ocean vessels for the next year to transport containers between Asia and the U.S. and Canada,” Galanti said. And we've leased several thousand containers for use on these ships.”
Every ship can carry 800 to 1,000 containers at a time, and Costco will make approximately 10 deliveries during the course of the next year, Galanti said.
Costco currently operates 817 warehouses, including 565 in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, three in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.