Costco’s sales climb in May as coronavirus impact continues

Costco Wholesale posted strong sales gains in May as the warehouse club saw ongoing growth in purchases of food, groceries and essentials and began reopening some services closed due to the coronavirus pandemic.

For the four weeks ended May 31, net sales totaled $12.55 billion, up 7.5% from $11.67 billion a year earlier, Costco said yesterday after the market close.

Overall comparable sales rose 5.4% year over year in May and were up 9.7% excluding the impact of changes in fuel prices and foreign exchange rates, the Issaquah, Wash.-based retailer reported. U.S. comps grew 5.5% (9.2% excluding fuel and forex), while Canada had a 0.9% decrease ( 4.9% excluding fuel and forex). International comp sales advanced 12% and were up 17.9% backing out fuel and foreign exchange.

Companywide, e-commerce sales soared 106.2% on a comparable basis.

“The COVID-19 pandemic impacted our sales and comp traffic in our warehouses for the month of May. Nonfoods rebounded in May compared to recent months, and the strength in foods and sundries and fresh continued,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a conference call late Wednesday. “We started May with most of our optical hearing aid and photo departments closed but added back service progressively over the month. We finished with approximately 90% back in operation by month-end. But even after opening, sales volumes are still being negatively impacted by COVID-19. Food court service continues to be limited to carryout only. And, of course, travel was significantly down year over year.”

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Costco’s customer traffic in May declined 4.8% year over year in the United States and 7.9% worldwide. The average transaction, however, grew 14.4% overall, reflecting negative impacts from foreign exchange and fuel price deflation.

In the U.S., southeastern Texas and the Northeast were the regions seeing the strongest comp-sales results during May, according to Sherwood. Generally, consumables categories experienced robust growth, though hardline also turned in a strong performance, he explained.

“Food and sundries were positive. High-teens departments with the strongest results were frozen food, liquor and foods. Fresh foods were up low 20s. Better-performing departments included meat and produce,” Sherwood said in the call. “Hardlines were positive, low 20s, and better-performing departments included major appliances, which includes consumer electronics, sporting goods and hardware. Softlines were positive, low single digits. Sales were soft in luggage, jewelry and apparel but improved versus April. Ancillary businesses were down high 30s. This was primarily as a result of lower gasoline sales and partial closings [of service businesses].”

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Gasoline price deflation negatively impacted Costco’s total comp sales in May by just over 3%, Sherwood reported, adding that the average selling price was $2.06 per gallon versus $3.13 a year ago.

Currently, Costco has 787 wholesale clubs overall, including 547 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, 12 in Australia, two in Spain, and one each in Iceland, France, and China. The retailer operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

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