Costco E-Commerce Gains Shine Through in Its Earnings

Costco Wholesale Corp. (NASDAQ: COST) has released its earnings covering its fiscal year 2020 and data on its February sales results. The wholesale club and big-box merchant reported that its sales for the quarter rose by 10.5% to $38.26 billion. On an adjusted basis for the quarter, U.S. sales growth of 8.1% beat the 6.8% in Canada and 7.1% growth in “other markets,” but those figures were better on an unadjusted basis. Costco’s e-commerce revenues were up 28% in the quarter. Costco’s net income of $931 million for the quarter translated to $2.10 per share.

The consensus estimates were calling for $2.07 in earnings per share (EPS) and $38.21 billion in revenue. The same period of last year reportedly had $2.01 in EPS and $35.40 billion in revenue.

During Costco’s fiscal first quarter, the company saw net sales increase 5.6% year over year, while membership fees increased by 6.1%.

One issue that Costco did address was the shorter period between Thanksgiving and Christmas. The company noted that total and comparable sales were positively affected by approximately half of a percent and e-commerce sales were positively affected by roughly 11 percentage points.

As for the four-week reporting month of February (ending March 1, 2020), the retail giant reported net sales of $12.20 billion, for a gain of 13.8% from the same period last year. Comparable sales in February were up 12.4% on a stated basis and 11.6% higher on an adjusted basis in the United States. The company did note:

February sales benefited from an uptick in consumer demand in the fourth week of the reporting period. We attribute this to concerns over the Coronavirus and estimate the positive impact on total and comparable sales to be approximately three percent.

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Investors should consider that Costco did not offer guidance, and there are also no further comments on what it expects from the impact of the coronavirus at the retail level nor what impact it is seeing in its supply chain. This report should be considered unfinished business until guidance or direction is offered in the conference call.

Costco shares closed down 1.55% at $315.76 on Thursday, and they have listed up and down marginally in the after-hours.

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