Costco says holiday calendar shift, web glitches impacted November, Q1 sales

Costco Wholesale Corp. saw sales rise in November and its fiscal 2020 first quarter but took a hit from this year’s later Thanksgiving shopping weekend and a website outage that hurt e-commerce business for the Black Friday rush.

For the retail month of November, which Costco defined as the four weeks ended Dec. 1, net sales came in at $13.62 billion, up 6.7% from $12.77 billion a year earlier.

Costco reported first-quarter sales with and without the Thanksgiving Day-Black Friday shopping period, which occurred a week later in 2019.

For the 12 weeks ended Nov. 24, the warehouse club retailer tallied net sales of $36.24 billion, a gain of 5.6% from $34.31 billion a year ago. Including Thanksgiving Day (Nov. 28) and Black Friday (Nov. 29), net sales for the 13 weeks ended Dec. 1 totaled $39.95 billion, up 6.3% from $37.57 billion in the comparable period in 2018.

Analysts, on average, projected Costco’s first-quarter sales at $37.37 billion, with estimates ranging from $36.76 billion to $37.68 billion, according to Refinitiv/Thomson Reuters.

On a comparable-store basis, Costco’s November sales (four weeks ended Dec. 1) climbed 5.3% year over year. U.S. comp sales were up 4.8%, and the retailer posted gains of 5.6% in Canada and 7.5% internationally for the month. Excluding the impact of changes in fuel prices and/or foreign exchange, Costco had comp-sales growth of 4.8% for November, including increases of 4.3% in the U.S., 5.8% in Canada and 6.8% internationally.

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“Food and sundries were positive mid-single digits. Departments with the strongest results were deli, freezer and liquor. Hardlines were positive low single digits, despite being negatively impacted by the holiday shift. Better-performing departments were majors, health and beauty and hardware,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a call late Wednesday on November sales results.

“Softlines were up low and mid-single digits. Better-performing departments included housewares, special-order kiosks and apparel,” he added. “And finally, fresh foods were up mid- to high single digits. Better-performing departments included service deli and produce. Within the ancillary businesses, gas, hearing aids and optical had the best comp-sales increases.”

Gasoline price inflation positively impacted total reported comp sales by about 40 basis points. Sherwood said comp-store traffic including the holiday calendar shift rose 2.6% in the U.S. and 3.3% worldwide for November. The average transaction edged up 1.9%, reflecting the impact of fuel price inflation, foreign exchange and the timing of the holiday period.

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E-commerce sales fell 3.6% (-3.7% excluding fuel/foreign exchange) on a comparable basis for November. Costco said e-commerce sales were negatively impacted by 20 percentage points, mainly from the Thanksgiving-Black Friday-Cyber Monday shopping period occurring a week later this year versus last year and website glitches on the retailer’s U.S. and Canadian e-commerce websites on Thanksgiving Day and Black Friday.

According to published reports, Costco lost as much as $11 million in sales from the website technical issues. Because of the outages and slow response times, Costco had posted a website banner that said it was extending one-day Thanksgiving sales into Friday.

“Our online sales were negatively impacted due to the timing of Thanksgiving, Black Friday and Cyber Monday. In addition, performance issues on the U.S. and Canadian websites on Thanksgiving and Black Friday also negatively impacted our sales,” Sherwood explained in the call. “Total and comparable sales were negatively impacted by approximately 1.5%, while our online sales were negatively impacted approximately 20%, with the majority of that coming from the holiday shift.”

Comparable sales grew 5.1% overall for the 13-week quarter ended Dec. 1, including gains of 5.5% in the U.S., 3.8% in Canada and 4.2% internationally. E-commerce comps for the period were up 6.9%, Costco reported.

In the 12-week period, total same-store sales rose 4.3%, reflecting increases of 4.7% in the U.S., 2.9% in Canada and 3.2% internationally, while e-commerce comp sales advanced 5.5%.

Excluding the impact of fuel and/or foreign exchange, Costco turned comp-sales growth of 5.7% for the 13-week quarter, including upticks of 5.7% in the U.S. and Canada, 5.4% internationally and 7.1% in e-commerce. The comp-sales gains without fuel and forex for the 12 weeks were 5% overall and 5% in the U.S., 5.1% in Canada, 4.5% internationally and 5.7% in e-commerce.

Issaquah, Wash.-based Costco finished the first quarter with a total of 785 club locations, including 546 in the U.S. and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one apiece in Iceland, France and China. The retailer also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.