Costco expects to add 23 net new warehouse clubs to its fleet this fiscal year as a part of a $3 billion planned capital spending program.
Officials of the Issaquah, Wash.-based retailer said that about three-quarters of the new units—or about 17—would open in the U.S., a figure that comprises four store relocations, including two that opened in its recently completed first quarter. Costco added 13 new clubs in the U.S. last year, along with four relocations. Costco’s fiscal year began in September; it opened eight new units, including two relocations.
Costco this week said a new unit would open in Coral Springs, Fla., in February but has not publicly identified future U.S. sites beyond that. The company typically does not identify opening dates until about two months before they open.
Data from Planned Grocery, a site tracking retail developments from Beitz and Daigh Geographics, indicates the company could open as many as 10 more sites in 2019. Its estimates indicate the following sites: Bayonne, N.J. (February); Oklahoma City (April); Cypress, Texas (second quarter); Loves Park, Ill.; Bradenton, Fla.; St. Cloud, Minn. (third quarter); and Eagan, Minn. (fourth quarter). A new club in Harrison, N.J., may also open during the calendar year, Planned Grocery said.
The site lists another 19 U.S. cities where Costco stores are proposed or planned, with estimated openings through 2022 in Patterson, N.Y.; Branford and Clinton, Conn.; Ridgeland, Miss.; Mooresville, N.C.; Bluffton, S.C.; Athens and Sharpsburg, Ga.; University City, Mo.; Meridian, Idaho; Cherry Hill, N.J.; Cranston, R.I.; Pleasanton, Napa and Murietta, Calif.; and Dallas, McKinney, Sherman and El Paso, Texas.
Costco’s new stores helped to power robust sales in the first quarter, with sales increasing by 10.3% to $34.3 billion. Comparable-store sales in the U.S., excluding fuel, soared by 8.3% on a 5.2% gain in store traffic, and e-commerce sales increased by 26.6%.
Net income totaled $767 million, a 19.8% increase helped in part by tax benefits. Earnings per share, when adjusted for a 12-cent benefit, came in a penny short of Wall Street estimates, which sent stock down more than 6%.
In a conference call with analysts, CFO Richard Galanti said Costco experienced margin softness in areas such as meat and fresh vegetables, acknowledging deflation along with greater price competition from rivals such as Sam’s Club and supermarkets.
“We've got good fresh sales numbers, but … our competitors are working in a little lower margin there and we're not going to let anybody take it away from us,” Galanti said.
Galanti said he believed much of Costco’s growing e-commerce sales were incremental, as stores are seeing their geographic draw widen with delivery, but confessed “it’s hard to say when the in-store [visits] are so strong."
Elaborating on Costco's e-commerce business, Galanti said it "has opened some new markets for us or some expanded markets. Anecdotally," he added, "I have plenty of friends that come up to me and tell me that how they love it in terms of doing more of their incremental food shopping that way or making it more convenient to themselves. And we’re finding the people that live further away are using it more.”