As shoppers continue to find ways to stretch their earnings, Costco Wholesale Corp. and other wholesale clubs came out on top during May’s earnings season, while retail giants Walmart and Target floundered during these inflationary times.
Costco reported in its May 26 earnings call that comp sales for the third quarter which ended May 8, were up 14.9% for the total company, 16.6% in the United States and 15.2% for Canada. Excluding fuel, comp sales in the U.S. were up 10.7% and in Canada, 12.8%.
The Issaquah, Wash.-based wholesaler added that net sales for the third quarter increased 16.3% to $51.61 billion. In comparison, net sales for third-quarter 2021 were $44.38 billion. Net sales for the first 36 weeks increased 16.4% to $151.97 billion, from $130.61 billion last year.
Costco said in a statement that “net income for the quarter was $1,353 million, $3.04 per diluted share, which included a one-time $77 million pretax charge, 13 cents per diluted share, for incremental benefits awarded under the new employee agreement effective March 14. Last year’s third quarter net income was $1,220 million, $2.75 per diluted share, which included $57 million pretax, 9 cents per diluted share, in COVID-19 related costs, primarily from $2 per hour premium pay. Net income for the first 36 weeks of fiscal 2022 was $3.98 billion, $8.94 per diluted share, compared to $3.34 billion, $7.51 per diluted share last year.”
Bob Nelson, SVP of finance and investor relations for Costco, told analysts in a conference call after the markets closed May 26 that “in terms of third-quarter comp metrics, traffic or shopping frequency increased 6.8% worldwide and 5.6% in the United States.” Nelson added, “Our average transaction was up 7.6% worldwide and up 10.4% in the U.S. during the quarter.”
Costco, which operates 830 warehouses including 574 warehouses in the United States and Puerto Rico and 105 in Canada, said it expects to open 14 new warehouses in the United States.
Nelson also mentioned membership fees on the earnings call and said that “given the current macro environment, the historically high inflation and the burden it is having on our members and all consumers in general, we think increasing our membership fee today ahead of our typical timing is not the right time.”
During the call, Nelson also addressed rumors of a price increase of its famed hot dog and soda combination. Nelson said Costco has no plans right now to raise the price of the company’s $1.50 hot dog and soda combination.