Costco reports double-digit sales growth for August, Q4

Costco Wholesale this week reported across-the-board, double-digit comparable sales gains for August and gave a peek at year-end results.

For the four weeks ended Aug. 30, net sales climbed 15% to $13.56 billion from $11.79 billion a year earlier.

Costco’s overall comparable-club sales for August jumped 13.2% year over year and were 14.5% excluding the impact of changes in fuel prices and foreign exchange rates. By business unit, comp sales rose 12.5% in the United States (14.3% excluding fuel and forex), 14.6% in Canada (15% excluding fuel and forex) and 16.1% internationally (15.4% excluding fuel and forex). E-commerce sales soared 101.9% on a comparable basis (101.6% excluding forex).

“Our comp traffic, or frequency, for August was up 0.8% worldwide and 3.1% in the U.S.,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a conference call. “Worldwide, the average transaction was up 12.4%, which includes the impacts from foreign exchange and gasoline deflation.”

Sherwood noted that August sales were negatively impacted by the calendar shift for Labor Day, which this year falls on Sept. 7 in the U.S. versus Sept. 2 in 2019. Costco estimated the sales and traffic impact at 75 basis points in the U.S. and just over 50 basis points worldwide, he said.

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On a comparable basis, shopper traffic in U.S. Costco wholesale clubs rose 3.1% year over year in August.

Grocery and home categories saw strong comp-sales growth among core merchandise areas in August.

“Food and sundries were positive mid-teens. Departments with the strongest results were frozen foods, liquor and cooler. Fresh foods were up low 20s. Better-performing departments included meat and produce,” said Sherwood. “Hardlines were positive high 20s. Better-performing departments included major appliances, which includes consumer electronics, garden and sporting goods. Softlines were positive mid-teens. Small appliances, jewelry and apparel were strong in the month.”

The comp-sales category performance excludes the impact of foreign exchange, he noted.

“Ancillary businesses were down low double digits. This was primarily as a result of lower gasoline, photo and food court sales. Optical and hearing aids were lower single digits year over year,” he said. “Gasoline price deflation negatively impacted total reported comp sales by approximately 150 basis points. The average selling price was lower year over year at $2.39 per gallon, compared to $2.80 [a year ago].”

In the 16-week fourth quarter ended Aug. 30, Costco tallied net sales of $52.3 billion, up 12.7% from $46.4 billion in the prior-year period. Comp sales grew 11.4% overall and 14.1% excluding fuel and foreign exchange, with e-commerce up 90.6% (91.3% excluding forex).

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Comp sales results for the quarter reflect gains of 11% in the U.S. (13.6% excluding fuel and forex), 9.1% in Canada (12.6% excluding fuel and forex) and 16.1% internationally (18.8% excluding fuel and forex).

For Costco’s 2020 fiscal year, net sales came in at $163.2 billion, rising 9.2% from $149.4 billion in fiscal 2019. On a comparable basis, sales advanced 7.7% and grew 9.2% excluding fuel and foreign exchange. Online comp sales surged 49.5% versus last year (50.1% excluding forex).

By business unit, comp sales increased 8.1% in the United States (9.2% excluding fuel and forex), 5% in Canada (7.4% excluding fuel and forex) and 8.9% internationally (11.2% excluding fuel and forex).

Issaquah, Wash.-based Costco operates 795 warehouse clubs overall, compared with 783 a year earlier. Current club counts by market are 552 in the U.S. (including Puerto Rico), 101 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in Korea, 13 in Taiwan, 12 in Australia, three in Spain and one apiece in Iceland, France, and China. The retailer also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.