Advertisement
09/27/2021

Costco delivers strong fourth-quarter results, limits sales of essential items

Sales are up both in Canada and the U.S. as the warehouse club heads into the busy holiday period
A night time aerial shot of a Costco store and parking lot in Ontario

Costco had a blockbuster fourth quarter even as the company faces the same negative supply chain and inflationary pressures affecting all food retailers.

For the period ended Aug. 29, net income at Costco was US$1.67 billion or $3.76 per share. Last year's fourth-quarter net income was $1.389 billion or $3.13 per diluted share. 

Net income for the fiscal year was $5.01 billion, or $11.27 per diluted share, compared to $4 billion, or $9.02 per diluted share in the prior year.

In Canada, same-store sales for the 16-week period ended Aug. 29 increased 19.5%, while comparable sales–excluding the impact of gasoline sales and foreign currency fluctuations--increased 6.7%.

E-commerce sales for the warehouse club operator were also strong. Costco, which operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia, reported an online sales increase of 8.9%

Membership fee income for the fourth quarter came in at $1.234 billion, a 9.7% increase. The United States and Canada renewal rate was 91.3%. 

Despite the good financial news, the retailer said it was putting limits "on key items like bath tissues, roll towels, Kirkland Signature water, [and] high-demand cleaning-related SKUs related to the uptick in Delta-related demand,” at its stores in the U.S., said Richard Galanti, CFO of Costco, during an earnings call.

“[W]e’re ordering as much as we can and getting it in earlier, and I think, as evidenced by the most recent sales results, we’re doing okay with this,” Galanti said.

Costco said it was experiencing port delays, higher labour and freight costs, and shortages on everything from shipping containers, trucks, and drivers to various components, raw materials, and ingredients, causing most of its general items to sell out within two weeks.  

Galanti also said fresh food inflation was "up in the mid to high single digits, with meat leading the way, up high single to low double digits due to feed, labour and transportation costs."

"It's a lot of fun right now," Galanti joked. 

Looking ahead to the holidays, the retailer said it planned to expand its assortment as a way to counter supply chain effects.

"For Christmas, it used to be just tree and trim, home and electronics," Galanti said. "Today, it's all those things, plus things for the house from barbecue grills, even summer items, but anything you can get your hands on."