Costco's Sales Cool as Coronavirus Stockpiling Slows
May 28 2020 - 7:29PM
Dow Jones News
By Sarah Nassauer
The coronavirus stockpiling that cleaned out some Costco shelves
in March has cooled.
Costco Wholesale Corp. reported higher sales for its latest
quarter, but its growth wasn't as fast as some competitors that
were also able to stay open during the pandemic. Comparable sales,
those from stores and digital channels operating for at least 12
months, rose 7.8% during the quarter ended May 10. The figure
excludes the impact of gasoline sales and currency swings.
Costco's monthly comparable sales fell in April for the first
time in over a decade as social distancing rules limited visits and
more shoppers stayed home. The retailer also put limits on certain
items and restricted how many shoppers could enter a store during
the quarter.
During the quarter 4.1% fewer shoppers visited stores but spent
an average of 9.3% more per transaction, the company said. Costco
has a relatively small e-commerce business, but sales jumped 66% in
the quarter.
The company is navigating a new dynamic that includes some
shoppers who don't want to go out, and others who still prefer to
visit stores but want to feel safe, finance chief Richard Galanti
said. The company faced some angry critics after the chain required
customers to always wear masks in stores, but overall shoppers like
the rule, Mr. Galanti said.
Some shoppers prefer large stores such as Costco "which is
bigger, more wide open," he said, and "all we're doing with the
mask requirements. There are a few people that don't like it, but
most people do."
Walmart Inc., the country's largest retailer by revenue, said
sales rose 10% during the quarter ended May. 1. Target Corp.'s
sales climbed 10.8% during the quarter. Both retailers said last
week they saw a sales surge in stores early in the quarter, and a
larger shift to online buying for home delivery or curbside pickup
during the end of the quarter.
On Thursday, discount retailers Dollar General Corp. and Dollar
Tree Inc. also reported big gains as consumers turned to the
companies to stockpile food and other home goods during the
Covid-19 pandemic.
Dollar General said same-store sales in the first quarter jumped
nearly 22%. The company said demand remained elevated through the
bulk of May, but it has seen some moderation more recently.
Dollar General Chief Executive Todd Vasos told investors on an
earnings call that government stimulus checks and enhanced
unemployment benefits have boosted its customers. "She has a lot
more trepidation obviously just because of what's going on, but I
would tell you that she still has money in her pocket," he
said.
Costco generally serves a higher-net-worth customer that buys in
bulk. During the quarter, the company temporarily shut its optical,
hearing aid, photo and much of its food court business, but it has
started to reopen some of those services in recent weeks and return
to normal opening hours, Mr. Galanti said.
Some discretionary spending started to reappear near the end of
the quarter, including travel booking, said Mr. Galanti. "Members
are now starting to actually book travel again, although generally
further out than we have historically seen."
Costco's net income for the quarter hit $838 million, or $1.89 a
share, below analyst estimates of $1.95 a share, according to
Thomson Reuters. The company's profits were lower by $283 million
due to higher worker wages and store cleaning costs related to
Covid-19, the company said.
Other chains that temporarily closed in March and April have
reported sharp drops in sales, despite switching to online orders.
Nordstrom Inc. said sales dropped 40% from the year earlier to
$2.03 billion for its quarter that ended May 2. The department
store operator said about 40% of its locations are now open.
--Allison Prang contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
May 28, 2020 19:14 ET (23:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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