Costco got off to a strong start in its fiscal year, with earnings, revenue and comparable sales that beat analysts despite ongoing supply chain disruptions and inflation pressures.
On an earnings call with analysts, CFO Richard Galanti said a number of factors on putting pressure on the supply chain and inflation, including port delays, container challenges, COVID disruptions, shortages of various components, raw materials, ingredients, packaging supplies, labor cost pressures and truck and driver challenges. He also said that some inventory won’t make it Christmas, “but we’ve mitigated that as best as possible and feel pretty good about it.”
Galanti also said that, in talking with its merchants, Costco now estimates overall year-over-year price inflation will be in the 4.5% to 5% range. That’s up from the estimate of 3.5% to 4.5% he gave in September on the company’s fourth-quarter earnings call.
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“We've always said we want to be the last to raise the price and first to lower the price, recognizing there's a limit to what you can do based on these cost increases,” he told analysts. “Ultimately that may include us taking a little less markup. We saw inflation starting several months ago in a bigger way and continuing into this fiscal year. So I think it's going to continue, but hopefully we're getting towards the top and it'll start flattening out and subsiding.”
Net income totaled $1. 32 billion, or $2.98 per share, for the quarter ended Nov. 21, compared to $1. 16 billion, or $2.62 per share, in the year-ago period.
Net sales rose 16.7%, to $49.42 billion from $42.35 billion last year. Total comparable sales rose 15%, with a 15.9% increase in the U.S.
Traffic or shopping frequency increased 5.9% in the U.S. during the quarter. The average U.S. transaction or ticket was up 3.5%, excluding the positive impact from gas inflation and currency fluctuations. Income from membership fees rose 9.9% to $946 million.
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Costco opened eight stores in the first quarter and plans are to open a net 19 new units over the remainder of the year. The retailer currently operates 828 warehouses, including 572 in the United States and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.
This story originally appeared on Chain Store Age.