Dive Brief:
- Costco's sales rose 7% year over year to $46.45 billion in its fiscal fourth quarter, which ended Sept. 1. Sales rose 7.9% for the full fiscal year to $149.35 billion.
- Comparable sales were up 5.1% in Q4 and up 6.1% for the fiscal year. Growth in the U.S. was even more pronounced, with comps up 6.2% in the quarter and up 7.8% for the year. E-commerce comps grew nearly 20% for the quarter and by more than 23% for the year.
- Operating income rose by $17 million in Q4, and net income was up 5.2% to $1.1 billion. Net income for the year rose about 17% to $3.66 billion.
Dive Insight:
Another year, another thoroughly solid retail performance from Costco.
The retailer's CFO has said previously that the company didn't "see e-commerce taking over our brick and mortar." That may be — Costco's online growth is still dwarfed by that of fellow brick-and-mortar stalwart Walmart — but the retailer is still making headway without sacrificing profit.
Cowen and Co. analysts led by Oliver Chen pointed out in a client note Thursday that Costco's online growth was "driven by strong performance in majors, including electronics and appliances, as well as continued robust growth in online grocery" as well as through new product listings such as KitchenAid appliances, Weber Grills, beauty products and assorted "treasure hunt" items.
Morningstar analyst Zain Akbari describes Costco's approach to e-commerce as "measured." He also points out that 60% of online sales consist of store fulfillment for nongrocery items, which he describes as "optimal" given the retailer's brick-and-mortar strength.
"We believe that its membership model, cost leverage, and buying power strengthened by its concentrated assortment create a value proposition that is difficult to replicate online, as shipping costs intrude on the savings enabled by a low-frills store environment," Akbari said in a note last week.
Meanwhile store traffic rose 3.6% in the U.S. and membership renewal rates hit an all-time high of 90.7% in the U.S. and Canada, Telsey Advisory Group analysts pointed out in a client note. "Overall, we believe Costco is operating at a high level, and better than most in retail," the analysts said.
Data and analysis from Cuebiq, emailed to Retail Dive, shows that Costco had the highest rates of shopper loyalty among visitors to the retailer, Sam's Club, Target and BJ's over the summer. Among its shoppers, 66% only visited a Costco — not Sam's Club, Target or BJ's, according to Cuebiq's analysis of visitor data.
The Telsey Advisory Group analysts said that while investors are concerned about deceleration in comps over time, they expect "Costco to remain a share gainer, with its solid sales and traffic trends" as well as renewal rates and other advantages.
