Sales Growth Continues To Weaken At Costco

 Namnews, 6th April 2023

Costco’s sales growth weakened again in March as consumers made cutbacks amid persistently high inflation.

Having recorded double-digit increases during most of the pandemic, the warehouse club operator’s total monthly comparable sales rose only 2.6% after excluding the impacts of changes in petrol prices and foreign exchange.

Comparable sales in its 585 US outlets edged up 0.9% – the smallest advance since April 2020 – shortly after the lockdowns at the start of the Covid crisis.

There was better performance in Costco’s international markets, with its 107 stores in Canada seeing a 7.4% rise. Meanwhile, its 157 warehouses across Europe and Asia (including 29 in the UK) saw sales increase by 7.6%.

However, the group’s e-commerce unit recorded an 11.6% decline as consumers reined in their spending and returned to shopping in physical stores.

Analysts noted that the tepid performance underscored the risk that Costco’s long sales boom is finally petering out. It also adds another sign of weakness in the US and global economy.

Following the release of the disappointing figures last night, Costco’s share price dipped almost 3% in after-hours trading.

NAM Implications:

• Apart from predictable cutbacks in big ticket items…
• …it could be said that the warehouse model has reached saturation coverage.
• They can now consolidate, cut costs, juggle with assortment…
• …and still be a threat to established brands