Costco sales growth slows again in November

Costco Wholesale continued to see monthly net and comparable sales growth tail off in November.

For the four weeks ended Nov. 27, net sales rose 5.7% to $19.17 billion from $18.13 billion a year earlier, Costco reported. That compared with a 15.7% year-over-year net sales gain in November 2021.

Companywide, comparable-club sales rose 4.3% for November and were up 5.3% excluding changes in gasoline prices and foreign exchange (FX) rates, versus year-ago comp-sales growth of 14.1% (9.2% excluding fuel and FX).

By business unit, November comp sales advanced 6% in the United States (4.6% excluding fuel and FX) and 1% in Canada (6.6% excluding fuel and FX) but dipped 1% internationally ( 8.3% excluding fuel and FX), Costco said.

November’s results extended a growth decline from October, when Costco generated increases of 7.7% in net sales and 6% (6.7% excluding fuel and FX) in total comp sales. In September, the retailer posted gains of 10.1% in net sales and 8.5% (8.6% excluding fuel and FX) in overall comp sales.

E-commerce sales fell 10.1% on a comparable basis in November and were down 8.9% excluding FX. That compared with a 0.7% decrease in October ( 1.6% adjusted) and a November 2021 gain of 12.2% (11.7% adjusted). Online sales had inched up 0.7% on a comparable basis in September and were up 2.3% excluding FX.

Fresh food comparable sales climbed by mid-single digits for November, according to Costco. / Photo: Shutterstock

“Our comp traffic, or frequency, for November was up 3.4% worldwide and 2.6% in the U.S.,” Josh Dahmen, assistant vice president of finance and investor relations at Costco, said in a phone report.

Relative to the U.S. dollar, FX impacted total and comparable sales in November by about 2.5%, including approximately 7% for Canada and 11% internationally. Fuel price inflation lifted overall comp sales by 1.5%, as the average worldwide selling price per gallon was 12.5% higher for November versus a year earlier.

“Worldwide, the average transaction was up about 1%, which included the negative impact from FX and the benefit from gasoline inflation,” Dahmen added.

U.S. regions and markets tallying the strongest comp-sales results in November were the Midwest, Northwest and San Diego, while the top international performances in comp sales for the month came from Spain, the United Kingdom, Australia and Mexico, Dahmen reported.

“Inflation in food and sundries was consistent with October, while inflation for fresh was slightly higher year over year when compared to October,” he noted.

Among core categories, groceries and fresh foods turned in a strong comp-sales showing (excluding the impact of FX) in November.

“Food and sundries were positive in the low double digits. Cooler, sundries and food were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce,” Dahmen said. “Nonfoods decreased by low single digits. Better-performing departments included tires, sporting goods, toys, seasonal and automotive. Underperforming departments were majors, primarily consumer electronics, jewelry and hardware. Ancillary business sales were up mid-teens. Gas and food court were the top performers.”

Costco also gave a peek at first-quarter sales results. For the 12-weeks ended Nov. 20, net sales increased 8.1% year over year to $53.44 billion. The 13-week period ended Nov. 27, extending through the Thanksgiving holiday weekend, saw net sales rise 7.9% to $58.36 billion.

Q1 comp sales gained 6.6% overall (7.1% excluding fuel and FX) for the 12-week period, including a 9.3% increase (6.5% excluding fuel and FX) for the U.S. In the 13-week period, total comps grew 6.4% (6.9% adjusted), with an 8.8% uptick (6.3% adjusted) in the U.S. E-commerce sales declined by 3.7% for the 12 weeks (-2% excluding FX) and by 4.4% for the 13 weeks (-2.8% excluding FX).

“November’s core comps were 5.3%, and 1Q comps of 6.6% were slightly below consensus of 6.8%,” Jefferies analyst Corey Tarlowe wrote in a Nov. 30 research note. “While year-over-year inflation in food and sundries remained in line with October, Costco called out a slight increase in fresh food inflation. Notably, the nonfoods category was down low single digits year over year. Overall, Costco ended 1Q with top-line results of 8.1% year over year and remains a top pick of ours in the current environment.”

Issaquah, Wash.-based Costco currently operates 845 warehouse clubs overall, compared with 824 a year ago. By market, the retailer has 582 clubs in the U.S. and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two apiece in France and China, and one each in Iceland, New Zealand and Sweden. Costco also runs e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.