Costco kept advancing in the third quarter, with in-store and online sales gaining compared to a year before, when it was among the essential retailers that remained open during shopping restrictions in the COVID-19 pandemic.
Consumers purchasing to make their homes more comfortable and functional, ad as well as strength in food sales, have been among the factors driving results at Costco, the company reported.
For the third quarter ended May 9, Costco posted net income of $1.22 billion, or $2.75 per diluted share, including $57 million pretax, or nine cents per diluted share, in COVID-19 related costs, primarily from a $2 per hour premium pay bump for employees. In the year-earlier period, net income came in at $838 million, or $1.89 per diluted share, including $283 million pretax, or 47 cents per diluted share, of COVID related costs.
Comparable store sales excluding the effects of gasoline price and foreign exchange volatility increased 15.2% in the United States, 16.7% in Canada, and 13.1% in other international markets in the quarter for a 15.1% company gain year over year .
Traffic increased in the period, up 12.5% worldwide and 11.9% in the U.S., Richard Galanti, Costco’s CFO, said in a conference call, while average transaction was up 7.3% worldwide and 5.7% U.S. versus the year-before quarter or 1.8% and 2.7% respectively, sans fuel and foreign exchange effects.
E-commerce comps increased by 38.2% year over year in the quarter. Although the rate of e-commerce growth slowed from earlier in the fiscal year, with the 36-week average at 63.6%, it remains strong, coming over a 66.1% surge in the annum-prior third quarter, a growth rate more than double the year to date average then.
Galanti pointed out that, in the latest complete third quarter, Costco anniversaried its purchase of Innovel, now operated as Costco Logistics. He added that Costco Logistics has helped drive big and bulky sales, with the U.S. digital sales on such items up 53% during a quarter when the division fulfilled about 70% of big and bulky orders, reducing delivery speed to customers at the same time.
Net sales for the quarter gained 21.7%, to $44.38 billion. Total revenue came in at $45.28 billion versus $37.27 billion in the quarter a year earlier, helped along by a gain in membership fees, up to $901 million from $815 million as consumers continue to sign up for membership. In the third quarter two years ago, membership fees were $776 million. Operating income increased to $1.18 billion versus $1.12 billion in the year-before quarter.
In terms of stores, Costco remains in growth mode, Galanti said in the conference call, planning to open six new clubs in the third quarter one in the U.S., three in Canada and two internationally. Fourth-quarter plans include opening seven additional clubs, five in the U.S., and two internationally. Net club additions total 21 for the latest fiscal year, as planned. Costco plans to open about 25 net new units in each of the next two fiscal years, including a second warehouse in China, Galanti added.
