Costco Wholesale Corp. COST -1.09% said sales rose in the most recent quarter, as the warehouse retailer navigates rising costs and shipping snarls that mean some toys will reach its stores after Christmas.
About 79% of Costco’s imports are late by an average of 51 days, Chief Financial Officer Richard Galanti said on a call Thursday. “Virtually, all departments are impacted. We’ve ordered early in many cases,” he said. “In some instances, delayed inventory simply extends the season.”
Some toy and holiday season items will arrive after Christmas, he said, “but we’ve mitigated that as best as possible and feel pretty good about it.”
The company’s inventory position is strong versus competitors, he said. “I think we have done a good job in merchandising,” he added.
Comparable sales, those from stores and digital channels operating for at least 12 months, rose 9.8% in the quarter ended Nov. 21 compared with the same period last year, excluding gas sales and currency fluctuations. E-commerce sales rose 13.3% during the quarter.
Costco, which specializes in selling discounted bulk goods to paying members, has reported strong sales for years. More recently the retailer got a boost from pandemic buying habits that sent shoppers looking for bulk goods and increased spending on food to eat at home. Some of those trends are starting to cool, with lower food sales compared with last year, Mr. Galanti said Thursday. Electronics sales were strong in the quarter, he said.
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For the latest quarter the company estimates that overall year-over-year price inflation was in the 4.5% to 5% range.
In late October, Costco raised its starting wage for workers to $17 an hour, eating into profit, Mr. Galanti said. Costco generally prefers to have a minimum wage that is higher than retail competitors to attract talent and reduce turnover, executives have said over the last year.
Buying trends point to more people gathering in person for the holiday season, said Mr. Galanti with higher sales for holiday and baking items.
In the most recent quarter, net sales rose 17% to $49.4 billion, up from $42.4 billion in the same period last year. Analysts expected net sales of $49.7 billion for the quarter, according to FactSet.
Net income hit $1.3 billion in the most recent quarter, up from $1.2 billion in the same period last year. Analysts expected net income of $1.2 billion, according to FactSet.
Earlier this year Costco executives said higher transportation and labor costs, along with inflation, were eating into profit.
Several large retailers reported strong sales for the start of the busy holiday shopping season, including Walmart Inc., Target Corp. and Home Depot Inc. Some smaller retailers such as Gap Inc. have said supply-chain snarls suppressed sales due to lack of inventory to meet strong demand.
Write to Sarah Nassauer at [email protected]
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Appeared in the December 10, 2021, print edition as ‘Costco Sales Rise Amid Higher Costs.’
