Costco Keeps Drawing Homebound Shoppers -- Update
December 10 2020 - 7:14PM
Dow Jones News
By Sarah Nassauer
Costco Wholesale Corp. reported strong quarterly sales Thursday
as homebound Americans continue to spend more on food, homegoods
and fitness products during the pandemic, especially the
high-income shoppers that make up much of the warehouse chain's
shopper base.
Comparable sales, those from stores or digital channels
operating for at least 12 months, rose 17.1% during the quarter
ended Nov. 22, excluding the impact of gasoline sales and currency
movements. The retailer's e-commerce sales jumped 86% in the
quarter.
Big-box retailers including Walmart Inc. and Target Corp. have
generally fared well amid the coronavirus crisis, offering
pandemic-weary shoppers one-stop shopping and in some cases, easy
buy online, pick up in store parking lot options.
Costco's shoppers, who pay a membership fee to shop, are
spending less on travel and eating out during the pandemic and more
on food, appliances, homegoods and other items, said finance chief
Richard Galanti on a call with analysts Thursday. "They seem to
have redirected some of those dollars," he said.
Profit also rose during the quarter to $1.17 billion, up from
$844 million in the same period last year. Costco raised wages
during the quarter due to Covid-19, adding about $212 million in
costs for the period, said Mr. Galanti. But the company boosted
profits elsewhere, for example selling more food by reducing
spoilage, he said. Costco has extended premium wages through
January, he said.
Revenue grew to $43.2 billion in the quarter, from $37 billion a
year earlier.
For online orders, Costco is currently struggling with some
shipping delays, said Mr. Galanti, as e-commerce sales rise
dramatically during the holiday season, straining delivery
capacity.
Costco has adjusted its stated delivery windows and is warning
shoppers on its website, he said. It also has begun selling several
hundred nonfood items such as AirPods and Instant Pots through
Instacart, making them available for same-day delivery. Typically
Costco would only offer grocery items through Instacart.
Due to Covid-19 surges in some regions, the retailer continues
to limit store capacity in some areas and is trying to build
inventory for fast-selling items "that aren't going to go out of
style," such as toilet paper, paper towels and cleaning wipes, said
Mr. Galanti. "Although, then you get the next rush of spiking and
whatever extra inventory you had, it goes away pretty quickly," he
said.
Costco doesn't plan to join its competitors by offering more
ways to buy products online to pick up in stores or parking lots
anytime soon, said Mr. Galanti, mirroring longstanding skepticism
from the company on the financial merits of the concept. It
generally costs more for a retailer to sell online versus in a
store. "We continue to look at it and scratch our heads a little
bit," he said. "We don't have any current plan to do so."
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
December 10, 2020 18:59 ET (23:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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