Costco sales up 11.6% amid ‘unprecedented’ demand for gas
Costco Wholesale Corp. reported strong sales for its third quarter as rising fuel costs drew shoppers to Costco's pumps in record volumes.
The membership warehouse club giant’s net sales increased 11.6% to $69.15 billion in the quarter ended May 10. Total revenue, including membership fees, was $70.52 billion, up from $63.20 last year.
On the earnings call, Costco CEO Ron Vachris said that the company experienced “unprecedented demand” for gas during the quarter, requiring multiple daily gas deliveries to many locations.
“The high consumer price sensitivity, which fueled these record volumes, also drove many members to use our gas stations for the very first time in the third quarter,” he told analysts. “We believe this will drive even greater loyalty with these members in the future as members who use our gas stations typically spend more with us in the warehouse.”
[READ MORE: Costco to open its first standalone gas stations — in these states]
Vachris noted that the final five weeks of the quarter, which ended May 10, became Costco’s top five volume weeks.
Tariff Refunds
On the call, Vachris said Costco has begun submitting tariff refund claims and expects to receive refunds on its approved claims on a rolling basis during the next two to three months.
“As we have mentioned before, our plan is to return to our members in some form the portion of tariffs that were passed on to them,” he added. “How much we return and when depends on a variety of factors. Including how much refund money we receive, and when it arrives, as well as developments in the lawsuit filed against the company regarding the return process.”
Third Quarter
Costco’s net income totaled $2.19 billion, $4.93 per diluted share, compared to $1.90 billion, $4.28 per diluted share, in the year-ago period.
Comparable sales rose 9.8%, with digitally enabled comps increasing 21.5%. Comps rose 9.4% in the U.S. and 10.7% in Canada. Other international comps increased 11.2%.
Excluding the impacts from changes in gasoline prices and foreign exchange, total company comparable sales rose 6.6%. Adjusted comps rose 6.8% in the U.S. and 6.2% in Canada. Other international comps rose 5.9%.
Traffic or shopping frequency increased 2.4% worldwide. The company ended the quarter with 82.9 million total paid members, up 4.1% versus last year,
Openings/Relocations
Costco, which is targeting 30-plus net new openings per year in the coming years, opened four net new warehouses during the quarter, including three in the U.S., and one additional Canadian business center.
"So far this year, we have completed two relocations with more more planned in the fourth quarter as we continue to relocate select high volume warehouses to larger locations with more parking and expanded gas stations to provide a better member experience and drive more volumes in these warehouses," Vachris said on the earnings call.
Costco currently operates 931 warehouses, including 639 in the United States and Puerto Rico, 115 in Canada, 43 in Mexico, 37 in Japan, 29 in the United Kingdom, 20 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, three in France, two in Sweden, and one each in Iceland and New Zealand.
