Anxious shoppers stocking up in preparation for the coronavirus scare helped to overfill carts at Costco Wholesale Club—a signal of shopper trust in the Issaquah, Wash.-based membership warehouse retailer.
Store traffic soared by nearly 9% in February and average rings jumped by 2.7% as members turned to it for a variety of items associated with preparing for the fast-spreading virus, including shelf-stable dry grocery, cleaning supplies, bleach, water, paper goods, hand sanitizers, wipes, disinfectants, health and beauty care and items such as water filtration and food storage. “We’re doing our best to stay in stock on these and other items,” Chief Fiancial Officer Richard Galanti said during a conference call reviewing February sales and fiscal second-quarter earnings this week, according to a Sentieo transcript. “We’re getting deliveries daily, but still not enough given the increased levels of demand on certain key items. It’s been a little crazy this past week in terms of outside shopping frequency and sales levels and not only in the United States.”
The February sales lift came on top of already strong volumes achieved during Costco’s fiscal second quarter, which ended Feb. 16. Comparable sales for that period jumped by 9.1% in the U.S.—with about 3% of that related to virus shopping—as Costco rang up total sales of $38.3 billion, a 10.5% quarterly increase. Nonfuel comps in the period increased by 9.1%, which also benefited from a calendar shift moving some Thanksgiving sales into the quarter.
Food and sundries comps during the period were in the “mid-teens” Galanti said, and e-commerce comps increased by 28% in the quarter, excluding currency effects.
“Costco seems a trusted partner for many consumers in good times and bad, and at this stage, the company appears to be earning more than its fair share of virus-related spending,” Scott Mushkin, an analyst with R5 Capital, said in a note to clients this week. “But Costco also seems to be earning more than its fair share of spending no matter what is happening in the macro climate.”
Reported net income for the quarter came in at $931 million, or $2.10 per share.