Grocery Sales Lift Costco in June
Masked-up consumers shopped Costco stores in droves in June, prompting the retailer to report its first positive traffic comp since March.
In a pre-recorded June sales update, Senior Vice President, Financial Planning & Investor Relations David Sherwood said the club retailer had positive 0.4% customer traffic in June, the first time the company has seen positive store traffic since the start of the pandemic in the U.S.
"The COVID-19 pandemic continues to impact sales and comp traffic and ancillary departments [food court, gas, and photo] continue to under-perform relative to the core," Sherwood said.
Costco Wholesale reported net sales of $16.18 billion for the retail month of June, the five weeks ended July 5, 2020, an increase of 11.1% from $14.57 billion last year. For the 44 weeks ended July 5, 2020, the company reported net sales of $136.37 billion, an increase of 8.1% from $126.13 billion during the similar period last year.
Same-store sales excluding the impacts from change in gasoline prices and foreign exchange were 14.4%. E-commerce was up 86.7%.
Sherwood said the strongest departments in June were food and sundries, which had positive high teen comps (frozen food, liquor and deli). Fresh food comps were up in the positive mid 20s (meat and produce). Hard line comps were in the positive low 20s (appliances, hardware, health/beauty).
The strongest regions for Costco in June were the Southeast, Texas and Northeast.
In May Costco said e-commerce comparable sales (excluding the impacts of fuel and foreign currency fluctuations) were up a record-setting 108.1% for the four weeks ended May 31. The impressive metrics come a week after the retailer reported a 66.1% jump in e-commerce sales for the third quarter. Physical same-store sales excluding the impacts from change in gasoline prices and foreign exchange were 9.2% in May.
During a third quarter earnings call with analysts, Costco CFO Jack Galanti said the company would be bringing back sampling in-store after suspending it in March.
“We're going to start doing some things in mid-June on a slow rollout basis in sampling,” Galanti said. “I can't tell you anymore, but needless to say it’s not going to be where you go and just pick up an open sample with your fingers."
Costco said its fresh food gross margin percentage was up during the quarter. "Just looking at fresh foods and the food items of what we call food and sundries, it's it's been way up, particularly in fresh foods and somewhat and the rest," Galanti said.
Issaquah, Wash.-based Costco operates 787 warehouses worldwide, including 543 in the United States and Puerto Rico. The company, which is No. 5 on Progressive Grocer’s 2020 PG 100 list of the top food retailers in North America, also has e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea and Taiwan.
