Costco Q2 Net Sales Rise 6.5% as Shopper Frequency Remains Elevated

Shoppers continue to flock to retailer to save on bulk items

3/3/2023

With fresh being one of the key areas consumers come to Costco to shop for, it’s no surprise that its one of the categories that saw an increase in sales.

Consumers continue to seek value retail for their shopping needs amid high inflation. For its second quarter, ended Feb. 12, Costco Wholesale Corp. reported that net sales rose 6.5%, to $54.24 billion, from $50.94 billion last year.

Comparable sales for the second quarter, excluding gas inflation, in the United States were 5.8% and in Canada, they were 9.6%. For the total company, comps were 6.8%, excluding gas inflation and foreign exchange.

“In terms of second-quarter comp sales metrics, traffic or shopping frequency increased 5% worldwide and 3.7% in the United States,” said CFO Richard Galanti. Costco’s average transaction or ticket was up 1.9% in the United States.

With fresh being one of the key areas that consumers come to Costco to shop for, it’s no surprise that it was one of the categories that saw an increase in sales, the others being general food and sundry categories. Meanwhile, the retailer experienced a “weakness in big-ticket discretionary items,” with a drop in nonfood items such as housewares, apparel, jewelry and electronics.

E-commerce sales also took a hit in the second quarter, decreasing 8.7%, excluding the impacts from changes in gasoline prices and foreign exchange.

Regardless, membership growth remained strong. Membership fee income was $1.027 billion, compared with $967 million a year earlier.

Gross margin was higher year over year by eight basis points, coming in at 10.72% as a percent of sales, versus the year-ago second quarter at 10.64%.

Net income for the quarter was $1,466 million, or $3.30 per diluted share. Last year’s second quarter net income was $1,299 million, or $2.92 per diluted share.

Despite solid earnings for its second quarter, Costco reportedly missed its revenue estimates, sending its shares down about 3% in after-hours trading.

Costco currently operates 848 warehouses, including 584 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 each in Taiwan and Australia, four in Spain, two each in France and China, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.

Issaquah, Wash.-based Costco is No. 3 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America. PG also named the company as one of its Retailers of the Century.