Costco keeps up sales pace in January

E-commerce sales decline for third consecutive month, but analyst notes strong growth on three-year stack.
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Costco Wholesale's U.S. comparable sales rose 6.9% excluding fuel in January, above the 6.4% gain in December. / Photo: Shutterstock

Costco Wholesale upheld monthly sales growth momentum in January but saw a larger decline in e-commerce sales.

In the four weeks ended Sunday, net sales rose 6.9% to $16.84 billion from $15.76 billion a year earlier, Costco reported Wednesday after the market close. The year-over-year gain was virtually unchanged from December, when the Issaquah, Washington-based warehouse club chain posted a 7% increase.

“Lunar and Chinese New Year occurred on Jan. 22, 10 days earlier this year. The shift negatively impacted January’s other international and total company sales by approximately 2% and 0.25%, respectively,” Josh Dahmen, assistant vice president of finance and investor relations at Costco, said in a phone report.  

Net sales in the 22-week fiscal year-to-date period came in at $99 billion, up 7.5% from $92.10 billion a year ago, according to Costco.

Comparable-club sales companywide climbed 5.6% for January and were up 7.4% excluding changes in gasoline prices and foreign exchange (FX) rates, compared with comp-sales growth of 5.5% (7.3% excluding fuel and FX) in December and 14.2% (10.8% excluding fuel and FX) in January 2022.

By business unit, January comp sales grew 6.6% in the United States (6.9% excluding fuel and FX), 2.4% in Canada (8.9% excluding fuel and FX) and 3.9% internationally (8.7% excluding fuel and FX), Costco said.

E-commerce sales fell for the third straight month, down 15.4% overall (-14.4 % excluding FX) on a comparable basis in January. That followed declines of 6.4% in December (5.4% adjusted) and 10.1% (8.9% adjusted) in November.

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In the U.S., Costco saw traffic climb by 5.1% for January, building on growth of 3.6% in December. / Photo: Shutterstock

“Our comp traffic, or frequency, for January was up 6.2% worldwide, including the negative impact from the holiday shift. Traffic in the U.S. was up 5.1%,” Dahmen said. “Worldwide, the average transaction was down about 0.5%, which included the negative impact from FX,” he added.

Relative to the U.S. dollar, FX impacted net and comparable sales in January by about 1.8% companywide, 6.7% in Canada and approximately 5.8% internationally.

“There was no impact from gas pricing in the month, as the average worldwide selling price per gallon was the same year over year,” Dahmen noted.

U.S. regions generating the strongest comp-sales results in January were the Northeast, Midwest and Southeast,, while the top performances internationally came from Spain, the United Kingdom and Mexico, Dahmen reported.

“Year-over-year inflation for food and sundries was down slightly from December, while inflation for fresh was up slightly,” he said.

Grocery segments led field in January comp-sales (excluding the impact of FX) among Costco’s merchandise categories.

“Food and sundries were positive in the low double digits. Cooler, sundries and candy were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce,” according to Dahmen. “Nonfoods was negative low single digits. Better-performing departments included apparel, health and beauty, and tires. Underperforming departments were toys and seasonal, majors, primarily consumer electronics and jewelry. Ancillary business sales were up high single digits. Food court, optical and hearing aids were the top performers.”

In January, Costco saw core comparable sales accelerate on a three-year stack,  Jefferies analyst Corey Tarlowe noted in a research note on Thursday. Comp sales over three years surged by 31.8% in the U.S. (up 400 basis points versus December), by 35% in Canada (up 480 basis points versus December) and by 38.6% internationally (up 410 basis points versus December).

“Additionally, core e-commerce was down 14.4% year over year but accelerated to up 100% on a three-year stack, versus up 74% in December,” Tarlowe wrote in his report. Inflation also continues to let up in food and sundries, he added.

“Given January results, as well as the ongoing moderation in FX headwinds, we are maintaining our 2Q comp estimates but adjusting our fiscal-year comp estimates,” Tarlowe stated. “Our 2Q comp estimate stays at 5.7% (versus consensus of 5.1%) and our fiscal-year comp estimate moves to 5% (versus consensus of 4.7%).”

Overall, Costco now operates 848 warehouse clubs overall, compared with 828 a year ago. By market, the retailer has 584 clubs in the U.S. and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, two apiece in France and China, and one each in Iceland, New Zealand and Sweden. Costco also has e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.



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