Costco Q1s impacted by deflation and currency effects

Date : 09 December 2015

Leading global warehouse club operator Costco has announced sales performance for the first quarter of its 2015/16 year, revealing comparable sales down 1% at group level.  However, it achieved a more solid +2% in its core market in the US, where the relative strength of the dollar had no impact.

Adjusted performance of +6%

Excluding the negative impacts, especially of deflation in fuel sales, Costco's overall comparable performance is clearly more robust, up 6%.  The strongest performing regions were California and the Mid-West within the US and Canada, Mexico, Taiwan and Australia internationally, which all outstripped the average, with Canada's adjusted figures being the highest reported on +9%.

11 net new warehouses added

Costco continues to expand its depot network, with the primary focus still on the US.  In the quarter seven new depots were added in the US along with one each in Japan, Canada, Australia and Spain.  This represents the second opening in Spain, located at Getafe just south of Madrid.  Overall Costco now operates 697 warehouses worldwide, of which 70% are in the US.

Online now operating in five markets

This latest period saw Costco launch online sales in South Korea (its first online Asian market), adding to the coverage it already has in US, Canada, Mexico and UK.  Though still a small part of overall sales, Costco's online offer, which provides a largely differentiated range to its warehouses, grew by 15% in the quarter and now accounts for around 3% of the company total.  In addition to its own in house online operations its involvement with partner operators such as Google, Instacart, Boxed and Jet.com continue to evolve within the US as does the link with Alibaba's T-Mall platform in China.