Profits surge at Costco

Date : 12 March 2013

Costco’s second quarter sales, for the 12 weeks to February 17, increased by 8.2% to $24.3bn, with comparable store sales (excluding the impact of fuel and currency), up 5%. Net income attributable to Costco increased by 38.8% to $547m.

A resilient model despite economic headwinds

Costco delivered a strong set of results for the quarter, despite the headwinds of higher payroll taxes and fuel prices, and delayed tax refunds, which have led to softening trends at other grocery retailers. The retailer continues to benefit from a range of strategic initiatives, including a stronger focus on e-commerce, including replatforming its website and the launch of new apps, continuing to focus on driving renewal rates and international expansion.

France and Spain key candidates for international expansion

A further 14 stores are due to open in the current financial year, representing a slight up-tick in opening run rate over what has been achieved over recent years. Costco will be seeking to maintain this stronger rate of openings going forward, particularly in its international markets. A further five units are due to open in Japan this year, along with additional units in Taiwan, Mexico and Australia.

Commenting on European expansion, the retailer indicated that it has people on the ground in a “few countries”, including France and Spain. While it aims to have stores open over the next couple of years, plans are subject to delays driven by zoning and permission issues.