COVID-19 Craziness Impacts Costco in April

Food sales were strong and online sales surged 88%, but gasoline prices were cut in half and the closure of key departments weighed on Costco’s April same store sales.

U.S. same store sales at Costco were flat during the four-week period ended May 3, but the composition of those sales was unlike anything the operator of 547 domestic warehouses has ever seen.

Same store sales in the food and sundries category increased in the mid-teens and fresh food sales increased in the low 20% range, according to the company. Offsetting gains in those categories was a low 20% decline in softline sales, a 50% sales drop in ancillary departments and similar drop in gasoline prices, with an average per gallon sales price in April of $1.94 compared to $3.12 in April 2019.

The April period was a strange month for Costco because of actions the company took early on to regulate customer traffic in its warehouses and comply with social distancing measures by closing key ancillary departments.

At many locations, Costco shoppers waited in lines to enter buildings so customers could maintain safe distances from one another. This resulted in a decline in shopper traffic of 16%, according to the company, but it was somewhat offset by the fact that once inside the warehouse shoppers bought more stuff as the average transaction size increased 18%.

Shoppers were not able to make purchase in key departments such as optical, hearing aid and photo departments as those areas were closed to comply with social distancing. To highlight the impact of the closures, gasoline deflation and foreign exchange, Costco noted that its April same store sales increased 11.2% if those departments are excluded. The company also noted that it saw week to week improvement in sales and traffic trends.

Issaquah, Wash.-based Costco ended the April period with 787 warehouses, including 547 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 12 in Australia, two in Spain, and one each in Iceland, France, and China.