Costco published its first-quarter earnings for 2022, reporting more members and higher profits. Despite supply chain disruptions, labor crunches and inflation, the warehouse retailer has managed to keep consumers happy and keep shelves stocked.
Net income was US$1.324 billion, up from $1.166 billion in the same period last year. Net sales increased 16.7% to $49.42 billion from $42.35 billion last year.
In Canada, same-store sales for the 12-week period ended Nov. 21 increased 17.2% year over year, while comparable sales–excluding the impact of gasoline sales and foreign currency fluctuations--increased 8.3%.
Online 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 14.3%
Warehouse retailers have been a key player throughout the COVID-19 pandemic as consumers stocked up on groceries and household goods. Many consumers made fewer trips to stores during the pandemic and ended up with bigger baskets. Costco has been gaining members, reporting total paid households was 62.5 million, up 800,000 from 61.7 million a quarter ago.
The retailer did report slightly lower margins, thanks in part to lower margins for fresh foods. However, Richard Galanti, Costco’s executive vice-president and CFO was bullish on the margins, calling them “pretty good” in the face of inflationary pressures and efforts to mitigate price increases.
The retailer is grappling with supply chain issues like many others. Delayed inventory due to port congestion and transportation bottlenecks are causing some stock issues in the U.S. with certain products that are in high demand. The retailer reported about 79% of its import containers are late by an average of 51 days, impacting virtually every department. Costco has ordered its products earlier to work around the delays, but the longer lead times can’t fix everything.
“In some instances, delayed inventory simply extends the season. An example might be lawn and garden and patio,” Galanti said. “As soon as the product arrives, it sells pretty quickly, but it may extend into––beyond the normal seasonal time. Toys and seasonal, in fact, same thing, some inventory, in fact, won't make it before Christmas, but we've mitigated that as best as possible and feel pretty good about it.”
Costco operates 828 warehouses, including 105 in Canada.
A version of this article appeared at RetailLeader.com.