Sales in February get boost from coronavirus worries

ISSAQUAH, Wash.— Costco Wholesale Corp. reported a 10.5% increase in net sales for the second quarter of fiscal 2020. Comp store sales were up 9.1% in the United States and 8.9% for the company as a whole.

Net sales for the 12 weeks ended February 16 totaled $38.26 billion, up from $34.63 billion in the comparable prior year period. Net sales for the first 24 week year-to-date period increased 8.1%, to $74.49 billion from $68.94 billion last year.

Reported net income for the quarter was $931 million, or $2.10 per diluted share, compared to $889 million, or $2.01 per diluted share, last year. Net income for the first 24 weeks was $1.77 billion, or $4.00 per diluted share, compared to $1.66 billion, or $3.74 per diluted share, last year.

Comp store sales gains were even stronger in February, rising 12.4% in the U.S. and 12.1% company wide. (All figures unadjusted.)

Costco reported net sales of $12.20 billion for the four weeks ended March 1, an increase of 13.8% over the $10.72 billion recorded in the same period last year last year. The company noted that an uptick in sales in the fourth week of the reporting period, attributed to people stocking up on supplies due to concerns over the coronavirus, had a positive impact of about 3 percentage points on total and comparable sales in February.

“Members are turning to us for a variety of items associated with preparing for and dealing with a virus, such as shelf stable dry grocery items, cleaning supplies, Clorox and bleach, water, paper goods, hand sanitizers, sanitizing wipes disinfectants, health and beauty aids and even items like water filtration and food storage items,” Costco chief financial officer Richard Galanti told analysts during a conference call on Thursday. “And we’re doing our best to stay in stock on these and other items. We’re getting deliveries daily but still not enough given the increased levels of demand on certain key items. It’s been a little crazy this past week in terms of outside shopping frequency and sales levels and not only in the United States.”

Costco finished the quarter with 785 clubs, including 546 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. The company also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, and added sites in Japan and Australia during the second quarter.