Digital growth strong, with 25.5% increase

ISSAQUAH, Wash. — Costco Wholesale Corp. said net sales increased 7.3% to $24.6 billion in the fiscal second quarter. Top growth categories included grocery, consumer electronics, apparel, hardware, and health and beauty aids.

Comparable-store sales at its U.S. clubs rose 7.2%, excluding the impact of fuel price and currency changes, in the 12 weeks to February 17, the company reported on Wednesday.

Companywide, comps rose 6.7%, on an adjusted basis, and digital sales were up 25.5%.

The company has been investing to upgrade its delivery operations. Same-day grocery delivery is now available to members within a short drive of 99% of Costco’s U.S. locations, the company said, and two-day grocery delivery is available anywhere in the continental U.S. The company now offers grocery shipments in all 50 states.

The company plans to begin e-commerce operations in Japan this summer and in Australia shortly thereafter.

Net income for the quarter was $889 million, compared to $701 million in the year-ago period. Net income for the first 24 weeks of the fiscal year was $1.66 billion, compared to $1.34 billion last year.

Costco said its margins were lifted by deflation in gasoline and grocery prices.

Membership renewals in the United States and Canada came in at 90.7% in the quarter, slightly ahead of the previous quarter. Worldwide renewals also improved slightly, to 88.3%. Costco ended the quarter with 52.7 million cardholders in the U.S. and Canada, and 96.3 million cardholders worldwide.

Costco this week raised starting wages to $15 and $15.50 per hour, from $14 and $14.50 per hour in the United States and Canada. The company said the increases, along with higher pay for supervisors, will add 3 to 4 basis points to selling, general and administrative expenses over the next four quarters.

Costco currently operates 770 warehouses, including 535 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, two in Spain, and one each in Iceland and France. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.