Inside This Issue - News
Costco on the march
March 25th, 2013
ISSAQUAH, Wash. – Costco Wholesale Corp. posted strong top- and bottom-line growth for its 2013 second quarter, once again topping Wall Street expectations. The company’s earnings for the quarter were up 39%, to $547 million.
Total revenue jumped 8.3% to $24.87 billion, and comparable-store sales rose 5%, not counting the effects of gasoline inflation and stronger foreign currencies.
"Costco continues to outperform its peers in terms of overall sales growth, comparable-club gains, and space and SKU productivity," says Planet Retail U.S. research director Sandy Skrovan. "The retailer’s ability to keep members engaged and coming back for more is unparalleled. It has some of the most loyal customers across retailing."
Planet Retail is optimistic about the company’s future growth prospects.
"A reacceleration of club expansion efforts, both in the U.S. and abroad, and advances in e-commerce on a global perspective will propel the retailer forward," Skrovan says. "Five years ago, international operations generated less than a quarter of Costco sales. Five years from now, we project a third will come from international.
"By 2018 Costco will have doubled its sales in the space of a decade, a remarkable feat considering it’s the result of entirely organic growth."
Costco was raised to "outperform" from "market perform" by William Blair & Co. earlier this month. Analysts at the firm pointed to the company’s solid same-store sales gains, and suggested that the warehouse club’s sales were less vulnerable than those of rivals Walmart and Target Corp. to being poached by Amazon.com and other online rivals.
Costco opened nine new locations in the first quarter of the current fiscal year, which ended November 25. In the second quarter, which ended on February 17, the company added five more, including one in Washington, D.C.; one in Leicester, England; and one outside of Seoul, Korea. The other two openings were in Canada: one in Oshawa, Ontario, which is near Toronto, and the other in Drummondville, Quebec, which is in the Montreal market.
Costco expects to add another 14 clubs in the remainder of the current fiscal year: four in the U.S., five in Japan, two in the U.K., and one each in Taiwan, Australia and Mexico.
"We will most likely end the fiscal year with 28 new openings, and be operating a total of 636 Costcos worldwide at that time," chief financial officer Richard Galanti told analysts during a second quarter conference call.
That would amount to about a 4.5% to 5% increase in Costco’s total square footage. Galanti noted that Costco added 16 units in fiscal 2012 (for a square footage growth of about 3%) and 20 in fiscal 2011.
Meanwhile, Costco Online, which was revamped last fall, operates e-commerce websites in the U.S., Canada and the U.K.