Costco’s sales jump nearly 17% in July
E-commerce sales growth downshifts into single digits
August 5, 2021
![Costco_club_exterior-evening.jpg Costco_club_exterior-evening.jpg](https://eu-images.contentstack.com/v3/assets/blt58a1f8f560a1ab0e/blt179699092666688d/6699722af1754cbeb8a96859/Costco_club_exterior-evening_1.jpg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
Costco Wholesale saw e-commerce sales growth tail off in July despite double-digit net and comparable sales gains for the month.
For the four weeks ended Aug. 1, net sales climbed 16.6% to $15.21 billion from $13.04 billion a year earlier, Costco reported Wednesday after the market close. In the 48-week year-to-date period, the warehouse club retailer tallied net sales of $176.3 billion, up 17.8% from $149.66 billion a year ago.
Comparable-club sales during the July selling period rose 13.8% overall and were up 8% excluding the impact of changes in fuel prices and foreign exchange (FX) rates. By business unit, comp sales advanced 13.1% in the United States (8.5% excluding fuel and FX), 16.5% in Canada (5.5% excluding fuel and FX) and 14.4% internationally (7.8% excluding fuel and FX).
E-commerce sales, however, fell to single-digit growth from hefty double-digit increases in the previous month and year-ago period. In July, digital sales gained 7.4% on a comparable basis and were up 5.7% excluding FX, Issaquah, Wash.-based Costco said. That compares with year-over-year growth of 20.8% in June 2021 (18% excluding FX) and 75.3% in July 2020 (76.1% excluding FX).
The online result reflects an overall industry slowdown in e-commerce sales growth as more customers return to stores and retailers cycle last year’s big sales gains driven by the COVID-19 pandemic. For the 48 weeks, Costco said e-commerce sales surged 48.9% (47% excluding FX).
The company’s reported online sales don’t include sales through third-party providers such as Instacart.
“Our comp traffic, or frequency, for July was up 6.9% worldwide and up 5.8% in the U.S.,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a conference call late yesterday. “Worldwide, the average transaction for July was up 6.4%, which included positive impacts from gasoline inflation and FX,” he added.
Fuel price inflation lifted overall comp sales by approximately 3.9% for the month, according to Sherwood. “The average selling price was 40% higher year over year at $3.35 per gallon this year compared to $2.40 last year,” he said. “Comp gasoline volume was up significantly relative to last year and was also positive versus 2019.”
U.S. regions and markets seeing the strongest sales results for Costco in July were Texas, the Southeast and Los Angeles, Sherwood reported. Internationally, Mexico, Korea and Taiwan had in the top performances.
Food and groceries were among the merchandise highlights in year-over-year comp sales growth (excluding FX) for the month.
“Food and sundries were positive low single digits. Candy and frozen foods were the strongest departments,” said Sherwood. “Fresh foods were up mid-single digits, and better-performing departments included service deli and bakery. Nonfoods were positive low double digits. Better-performing departments included domestics, sporting goods, jewelry and hardware. Ancillary businesses were up mid-40s. Gas, food court and optical were all significant drivers.”
Costco ended the July retail period with 813 warehouse clubs overall, compared with 790 a year earlier. By market, the retailer operates 562 clubs in the U.S. and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 12 in Australia, three in Spain and one apiece in Iceland, France and China. Costco runs e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
“July core U.S. comp of 8.5% was very slightly below our 8.9% Q4 estimate, while Canada and International were both better,” Jefferies analyst Stephanie Wissink wrote in a research note late Wednesday. “However, the two-year U.S. comp accelerated 280 basis points month over month to 24.2%. A continued increase in COVID-19 cases could benefit near-term comps if food-at-home and other at-home spend rise as a result.”
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