Costco reported a sharp increase in sales in its latest earnings report as more shoppers flock to stores and e-commerce purchases soared as the holiday season begins.
For the wholesaler’s first quarter of fiscal year 2022, which ended November 21, 2022, net sales rose 16.7% to $ 49.92 billion, compared to $ 42.36 billion for the year-ago quarter.
|COSTS||COSTCO WHOLESALE CORP.||524.33||-5.78||-1.09%|
Taking into account membership dues for the subscription-based business, revenue for the 12 week period hit $ 50.36, surpassing Wall Street’s estimate of $ 49.6 billion, according to Refinitiv.
During a conference call following the results, Richard Galanti, Costco’s chief financial officer, said the company also saw membership increase by 800,000 households year over year to a total of 62.5 million.
Buying in bulk from Costco gives it a huge impact on purchasing power and offers some isolation from the soaring inflation that is being felt in the US
The company has made a name for itself by offering discounted prices to its customers. As a result, Galanti was asked if Costco was planning to increase prices or membership fees as the cost of goods continues to rise – and other retailers have already increased prices.
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“We have always said that we want to be the last to raise the price and the first to lower the price,” Galanti said, explaining that for various reasons the retail price of some items could go up while others go down. As for the membership fee increase, the CFO said he doesn’t see it anytime soon.
Although more shoppers are heading to Costco for goods as pandemic restrictions ease and Christmas shopping is in full swing, the big box chain has also seen a notable surge in ecommerce sales, up 13.3% quarterly are.
While Galanti didn’t touch on Costco’s online expansion plans during Thursday’s call, the surge in e-commerce sales is likely to attract investor attention.
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Costco isn’t known for its online business, but last week Charlie Munger, vice chairman of Berkshire Hathaway said the company could become a “giant internet player” that could pose a threat to online retail giant Amazon in the future.
“Amazon may have more to fear from Costco in terms of retail than the other way around,” Munger said at a conference on Friday. “Costco is going to be a huge internet player at some point. People trust him and they have tremendous purchasing power.”
Peter Aiken from FOX Business contributed to this report.