Costco Sales Continue to Rise -- Update

By Sarah Nassauer

Costco Wholesale Corp. said Thursday sales rose leading into the holiday shopping season, a sign that the warehouse retail chain continues to grab market share and benefit from a strong economy.

Comparable sales, those from stores or digital operations open for at least 12 months, rose 5% during the quarter ended Nov. 24 excluding the impact of gasoline prices and currency fluctuations. Thanksgiving and Black Friday, the busiest shopping period of the year, fell a week later this year, outside of the quarter. The shift reduced sales by about half a percentage point, the company said.

Profit rose, with net income of $844 million during the quarter, up from $767 million during the same period last year. Costco earned $1.90 a share, compared with $1.73 a share during the like quarter last year.

The retailer's e-commerce growth slowed considerably due to the later Thanksgiving, rising 5.7%. Without the holiday shift, e-commerce sales would have grown around 18% during the quarter, Chief Financial Officer Richard Galanti said on a conference call Thursday. In the previous quarter, Costco's e-commerce sales rose 21.9%.

On Thanksgiving, Costco's website slowed as shoppers rushed to grab deals and some customers couldn't check out. "It was unfortunate. Despite all the efforts to have plenty of capacity," said Mr. Galanti. Online sales from Thanksgiving through the following Monday rose "in the very high teens," he said, but "we did leave something on the table."

The company has long resisted encouraging shoppers to buy online for in-store pickup, saying stores' sales growth is healthy without offering the service and Costco would rather have shoppers come to stores to buy. On Thursday, executives said they remain skeptical of the service embraced by other retailers including Walmart Inc. and Target Corp.

"As it relates to buy online and pickup in-store, we continue to look at what others do and continue to scratch our head," said Mr. Galanti. "We're not at a point that we're planning to do anything with that."

Costco reported total revenue of $37.04 billion during the quarter, up from $35.07 during the same period last year.

The company's shares fell nearly 1% to $294.63 in after-hours trading. The stock is up 46% so far this year.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

December 12, 2019 18:49 ET (23:49 GMT)

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