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Sales at Costco dip in March

Warehouse club chain laps strong year-ago growth in posting results not seen since onset of pandemic.

Russell Redman, Executive Editor, Winsight Grocery Business

April 6, 2023

4 Min Read
Costco club exterior-banner_Shutterstock
Costco's March comparable sales in the U.S. fell by 1.5% but edged up 0.9% excluding the impact of fuel price changes and FX. / Photo: Shutterstock

Continuing to cycle robust prior-year gains, Costco Wholesale saw virtually flat net sales, decreased comparable sales and its fifth-straight month of declined e-commerce sales in March.

In the five weeks ended April 2, net sales inched up 0.5% to $21.71 billion from $21.61 billion a year earlier, Costco reported Wednesday after the market close. The gain was down from annual growth February, when the Issaquah, Washington-based warehouse club chain turned in a 4.7% uptick, as well as from an 18.7% jump in March 2022.

Net sales for the 31-week fiscal year-to-date period totaled at $137.77 billion, up 6% from $130 billion a year ago, according to Costco.

Companywide, comparable-club sales dipped 1.1% for March but were up 2.6% excluding changes in fuel prices and foreign exchange (FX) rates, compared with comp-sales growth of 3.5% (5% excluding fuel and FX) in February and 17.2% (12.2% excluding fuel and FX) in March 2022.

By business unit, March comp sales fell by 1.5% in the United States ( 0.9% excluding fuel and FX) and by 2.4% in Canada ( 7.4% excluding fuel and FX) yet rose 2% internationally ( 7.6% excluding fuel and FX), Costco reported.

E-commerce posted a bigger decrease in March, with sales down 12.7% (-11.6% adjusted) versus a February decline of 11.2% (-10.3% adjusted). That followed decreases of 15.4% in January (-14.4 % adjusted), 6.4% in December (5.4% adjusted) and 10.1% (8.9% adjusted) in November.

Costco-customer line amid pandemic-March 2020_Shutterstock

The last time Costco posted a sales performance like March 2023 was in the early part of the pandemic when the COVID-19 disrupted shopping behavior and pushed customers online. / Photo: Shutterstock

Costco’s March results were among its lowest since the pandemic’s onset, when it reported net- and comp-sales decreases for the April 2020 selling period—though e-commerce sales that month boomed (up nearly 86% year over year) as customers began a rapid, industrywide shift to online shopping to avoid the risk of COVID-19.

“Our comp traffic, or frequency, for March was up 4.6% worldwide and 3.6% in the U.S.,” Josh Dahmen, assistant vice president of finance and investor relations at Costco, said in a phone report. He added, “The average transaction was down about 5.8%, which included the negative impacts from FX and gas deflation.”

Gas price deflation trimmed overall comp sales by about 2%, as the average worldwide selling price dropped about 14% year over year, according to Dahmen.

“Foreign currencies year over year relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada by approximately 8%, other international, by approximately 5.1% and total company by approximately 1.7%,” he said.

U.S. regions turning in the strongest comp-sales performance for March were the Northeast, Southeast and Midwest, while the top results internationally came from the United Kingdom, Spain and Mexico, Dahmen reported.

“Year-over-year inflation for food and sundries and fresh foods were both down from February,” he said.

In line with recent trends, groceries set the pace in March comp sales (excluding the impact of FX) among Costco’s merchandise categories.

“Food and sundries were positive in the high single digits. Coolers, sundries and food were the strongest departments,” Dahmen said. “Fresh foods were up mid-single digits; better-performing departments included bakery and produce. Nonfoods was negative, mid- to high-single digits. Better-performing departments included tires, health and beauty, and apparel. Underperforming departments were home furnishings, toys and seasonal majors, and jewelry. Ancillary business sales were down high single digits. Food court, pharmacy and hearing aids were the top performers.”

In a research note on Thursday, CFRA Research analyst Arun Sundaram cited decelerating monthly comp-sales trends as a “bigger concern” for Costco.

“With consumer discretionary spending weakening and Costco now lapping strong sales figures from the last few years, it is possible we will see low-single-digit U.S. comp sales over the next several months,” Sundaram wrote. “Other metrics were strong, including membership growth ( 7%), renewal rates (92.6% U.S./Canada) and Executive membership penetration. We view a membership fee increase as imminent but believe Costco will reinvest most of this gain into lowering merchandise prices for its members, ultimately driving further membership growth and store traffic.”

Currently, Costco operates 850 warehouse clubs overall, compared with 829 a year ago. By market, the retailer has 585 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, 14 in Australia, four in Spain, three in China, two in France, and one apiece in Iceland, New Zealand and Sweden. Costco also has e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

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About the Author

Russell Redman

Executive Editor, Winsight Grocery Business

Russell Redman is executive editor at Winsight Grocery Business. A veteran business editor and reporter, he has been covering the retail industry for more than 20 years, primarily in the food, drug and mass channel. His 30-plus years in journalism, for both print and digital, also includes significant technology and financial coverage.

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