Financial Performance

Costco Posts 11.4% Same-Store Sales Increase

The big-box retailer continued to benefit from shoppers stocking up on everything from food to patio furniture.
Matthew HellerSeptember 25, 2020

Costco posted its largest quarterly gain in same-store sales on record as shoppers continued to stock up on everything from food and paper supplies to patio furniture amid the coronavirus pandemic.

As Barron’s reports, Costco is “one of a cohort of big essential retailers that has seen the most benefit from the Covid-19 crisis,” putting up consistently strong monthly sales throughout the summer.

For the fourth quarter, total revenue rose 12% to $53.38 billion while profit was $1.39 billion, or $3.13 a share, even though Covid-19 premium wages and sanitation expenses took a bite out of margins.

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Comparable sales surged 11.4%, the largest year-over-year gain in FactSet records that date to 2000 and more than double the growth of the previous quarter.

“We expected fresh food,” paper goods and other items already selling well early in the pandemic to continue selling, CFO Richard Galanti said on an earnings call, “but we were a little surprised in the strength in some of these nonfood, discretionary categories,” such as home goods and furniture.

In the spring quarter, Costco struggled to keep up inventory and placed limits on shoppers. Galanti said in-stock levels have stabilized and food is selling so fast that profit got a boost from the lack of loss due to spoilage.

The company, which had been slow to embrace online sales and has built its business around bulk packages, also posted a 93% gain in e-commerce sales in the fourth quarter. Same-day fresh food delivery has more than tripled, according to Galanti.

“Both Walmart and Costco have ramped up their grocery delivery options,” The Wall Street Journal noted. “While Walmart has built its own delivery and pickup services, Costco has mostly turned to Instacart Inc., which pays people to shop and deliver items.”

For the full fiscal year, Costco delivered $4 billion in profit for the first time.

“Costco’s consistent revenue growth across merchandise categories reinforces our view that the membership model is arguably the most attractive business model in hardline retail today,” Raymond James analysts said earlier this month.