Last week, the Costco Wholesale Corporation released information about the fiscal third quarter. Interestingly, compared with the same period in 2019 the total revenue increased significantly to $37.27 billion. As a reminder, Costco is one of the largest corporations in the United States when it comes to total revenue. Importantly, the fiscal third quarter ended on May 10.
A lot of people visited Costco’s warehouses to buy essentials such as large cleaning supplies and groceries in March. More people started to cook at home as not everyone is ready to return to restaurants. As a result, its same-store sales increased by 9.6% for the five-week period that ended April 5 compared with the same period in 2019.
Nevertheless, Costco had to deal with certain problems as the number of shoppers fell in April as many people decided not to leave their houses. For example, stay-at-home orders, social distancing requirements as well as some mandatory closures, affected its sales. Consequently, same-store sales declined by 4.7% globally for the four weeks that ended May 3.
Costco and coronavirus pandemic
Importantly, same-store sales failed to meet expectations. Analysts expected same-store sales to increase by 5.6%. Nevertheless, sales increased by 4.8%. Furthermore, costs were higher due to the coronavirus pandemic.
Also, net income dropped to $838 million or $1.89 per share. Last year, net income was $906 million or $2.05 per share. Moreover, additional wages as well as sanitation costs related to the pandemic reduced earnings by $283 million or 47 cents per share, on a pretax basis.
Notably, during the pandemic, customers started to buy more food and fewer discretionary items, such as luggage and jewelry.
Furthermore, Costco’s e-commerce sales jumped by 64.5% for the fiscal third quarter, compared with the same period last year. However, growth in e-commerce sales often comes with additional supply chain expenses.