ISSAQUAH, WA - Costco is off to a strong fiscal start for 2018, topping $31 billion in net sales for the first quarter while looking towards more growth to come in its online grocery game and beyond.
On an earnings call following the release of the retailer’s financial report, listeners inquired after concerns or noticeable impacts Amazon’s acquisition of Whole Foods might have had, to which CFO Richard Galanti reasoned that Costco’s value proposition has only gotten better.
“You read about Whole Foods having giant increase in member shops or customer shops that first week. I would hope they do, and I would expect them to,” the executive said, commenting that the lowering of prices gives more confidence that Costco’s value is even greater. “So, we’ll have to wait and see, and nobody can predict everything. All we know is that our brick and mortar is as strong as it’s ever been and trending in the right direction from there.”
According to a press release, highlights from the first quarter of fiscal 2018 included:
- Net sales at $31.12 billion, an increase of 13.3 percent from $27.47 billion during the first quarter last year
- Net income for the quarter was $640 million, or $1.45 per diluted share, compared to $545 million, or $1.24 per diluted share, last year
- Costco currently operates 746 warehouses, including 518 in the United States and Puerto Rico, 98 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland, and one in France
- Costco operates e-commerce websites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan
In terms of what's new, Costco rolled out two new online delivery-related offerings earlier this week, one that does not yet offer fresh foods and one that does.
Galanti described the fresh delivery-included option as an expanded white label same day grocery delivery offering through Costco’s partnership with Instacart.
“You can find both sites by going to costco.com and then clicking on the Grocery tab. You'll then be taken to a page offering and explaining both of these new online delivery options,” he clarified. “376 of our U.S. locations are live with it, and there will be a number of additional U.S. locations planned, added between now and the end of calendar 2018 as our partnership expands. There are approximately 1,700 SKUs, both dry and fresh that are offered and can be fulfilled through the Instacart white label option.”
That same day delivery is also a very competitive pricing value proposition, according to the earnings call.
With an eye on expanding even more of its reach in several arenas, including grocery delivery and other strategies to bring customers in store, it will be interesting to see how Costco’s strategy unfolds for this new year. And, of course, the role fresh produce might play.
