Costco sees sales surge in Q1

Date : 15 December 2017

We review Costco’s first quarter performance, including delivering ecommerce sales growth of over 40%.

Results boosted by timing of key holiday trade

Costco’s first quarter revenue increased by 13.2% to $31.8bn, with comparable store sales, excluding fuel and currency impacts up 7.9%. This included comparable store sales growth of 8.7% in the US, 4.3% in Canada and 8.2% across its other international markets. Net income attributable to Costco increased by 17.4% to $640m. The retailer benefitted from the timing of Thanksgiving, Black Friday and Cyber Monday in the results this year, which fell into Q2 last year.

Source: IGD Research

Significant jump in ecommerce performance

Costco’s ecommerce sales increased 42.1% in the quarter, having posted growth of 15% in Q4. The retailer has invested in improving its capabilities in this area and has added more private brand and premium non-food ranges over the last 12 months. The retailer has also started testing store pickup for jewellery and laptops across all US clubs. The retailer selected these categories as its research had shown that its members were reluctant to order these online for delivery. It has been pleased with the initial performance as over half of shoppers are making an additional purchase while in the club picking up their orders.

More to come as it starts to advertise its grocery ecommerce services

The retailer’s ecommerce performance will be further boosted as it moves out of the soft-launch phase of its two new grocery ecommerce initiatives. Having lagged many of its competitors in this space, in October it launched a nationwide, two-day delivery service for non-perishable and sundry items, encompassing around 500 products and expanded its white label, same-day grocery delivery service with Instacart. Currently live in around 400 US locations, this latter service offers 1,700 fresh and dry goods items for home delivery. The retailer will start to promote these services more heavily in the first few months of 2018.

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Stewart Samuel, Program Director, IGD Canada: based in Canada, Stewart heads up all of IGD's research and coverage on Costco. He is also responsible for shaping IGD's research program across North America. Contact Stewart at [email protected] for further insight on the region's markets, channels and retailers. Follow Stewart on Twitter: @Stewart_IGD