Weakening Consumer Demand Hits Costco

 Namnews, 9th December 2022

Having prospered during the last couple of years, latest figures from Costco suggest the warehouse club retailer is starting to feel the effects of surging inflation and weakening consumer confidence.

During its first quarter to 20 November 2022, Costco’s net sales still increased a healthy 8.1% to $53.44bn. However, this missed analysts’ estimates of $54.64bn and growth of 15.2% in the previous quarter.

Excluding the impacts of changes in petrol prices and foreign exchange, comparable sales in its 583 outlets in the US rose 6.5%. The 107 stores in Canada saw a 8.3% rise, whilst its 157 overseas warehouses (including 29 in the UK) saw sales increase by 9.1%.

Meanwhile, Costco’s merchandise costs rose 8.7% to $47.77bn as it grappled with higher freight and labour costs. However, pre-tax profits still grew, up 4.4% to $1.77bn.

Other leading US retailers such as Target and Dollar recently said that stubbornly high inflation was impacting consumer spending and driving down demand for discretionary goods.

NAM Implications:

• More inflation to come, methinks!
• Meanwhile, Costco everywhere set up to optimise available traffic.
• (BTW will Walmart Sam’s see this as an opportunity in the UK?)