Costco saw sales bounce from pandemic, but stay-at-home orders limited bigger gains

Business

Shoppers walk out with full carts from a Costco store in Washington, DC, on May 5, 2020.

Nicholas Kamm | AFP | Getty Images

Costco saw sales grow in the fiscal third quarter, as it benefited from customers buying huge packs of toilet paper, cases of bottled water and other bulk items during the coronavirus pandemic — but that growth was constrained by stay-at-home orders.

Here’s what Costco reported for the fiscal third quarter ended May 10:

  • Earnings per share: $1.89
  • Revenue: $37.27 billion
  • Same-store sales: up 4.8%

Although sales grew, its costs were higher due to the Covid-19 crisis. Net income fell to $838 million, or $1.89 per share, from $906 million, or $2.05 per share, a year ago. The retailer said additional wages and sanitation costs related to the pandemic reduced earnings by $283 million, or 47 cents per diluted share, on a pretax basis. 

Other factors cut into Costco’s earnings, too. During the pandemic, customers tended to buy more food and fewer discretionary items, such as luggage or jewelry. Its e-commerce sales jumped by 64.5% for the quarter, compared with the same period a year prior, growth that often comes with additional supply chain expenses.

Analysts had expected the company to earn $1.95 per share, according to Refinitiv. But due to the coronavirus pandemic, it may be difficult for analysts to predict a company’s performance. 

The membership warehouse club’s total revenue grew to $37.27 billion from $34.74 billion a year earlier. Wall Street expected revenue of $37.13 billion. 

Same-store sales grew by 4.8%, less than the 5.6% increase that analysts predicted. 

Shoppers flocked to Costco’s stores in March to buy essentials, such as large cleaning supplies and groceries. Its same-store sales grew by 9.6% for the five-week period that ended April 5 compared to the year prior. 

That surge dropped off in April, however, as many people hunkered down. The membership warehouse club said in a news release that sales were hurt by “stay-at-home orders, social distancing requirements and some mandatory closures.” Its same-store sales fell by 4.7% globally for the four weeks that ended May 3.

Costco has nearly 800 stores in the world, including 547 in the U.S. The retailer has added safety precautions to limit the spread of the coronavirus. It’s restricted the number of shoppers in stores, closed or limited service in certain departments like jewelry and optical and prohibited seating at its food courts. Earlier this month, Costco began requiring all customers to require a mask or face covering.

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