E-commerce sales were up 34% thanks to timing of Thanksgiving, while online sales mostly came from nonfood segments, analyst notes
Costco Wholesale Corp. on Wednesday reported a 9.9% year-over-year sales gain through the final stretch of the holiday-shopping season, marked by a big jump in online sales due to the later timing of this year’s big discount days for the period.
The membership warehouse chain (COST) said that for the five weeks ending on Jan. 5 – the time frame it defined as the retail month of December – it had sales of $27.52 billion. That was up from $25.03 billion during the same period last year.
Same-store sales were up 7.4% over the December period. E-commerce sales were up 34.4%, helped in part by Thanksgiving, Black Friday and Cyber Monday occurring a week later than usual this year. The company said online sales were “positively impacted by an estimated 15 percentage points” as a result of the timing.
Shares were up 1.9% after hours Wednesday. The stock is up 37.9% over the past 12 months.
Analysts and executives have said that more shoppers, still stretched from nearly three years of price increases, were turning to the biggest retailers for discounts. Those larger chains have more muscle to negotiate with suppliers or change their product sourcing to keep prices low.
“Overall, we think spending is stable as consumers are finding value in [Costco’s] offering,” D.A. Davidson analyst Michael Baker said in a research note on Wednesday.
He added that Costco’s December financials showed that its investments in e-commerce were starting to pay off.
“In addition, we see this as a function of strong discretionary sales, as e-commerce sales mostly come from nonfood categories, which are more weighted to discretionary areas,” he said.
Higher prices have forced people across income levels to focus on buying basic things like groceries, while forgoing things like electronics and sneakers that are less essential. In December, Costco reported a quarterly sales miss but said it saw wealthier shoppers as a pathway to more gains.
It also said it saw greater potential for growth in its pharmacy business as some traditional drugstore rivals, like CVS Health Corp. (CVS) and Walgreens Boots Alliance Inc. (WBA), face competition from Amazon.com Inc. (AMZN) as well as a struggling consumer and falling prescription-reimbursement rates.
Grocery chain Albertsons Cos. Inc. (ACI) on Wednesday also said it planned to focus more on its pharmacy business as a growth driver against that backdrop. The company cited the popularity of GLP-1 drugs used to treat diabetes and manage weight.