Costco's Q1 earnings rise as construction in China progresses

Costco Wholesale Club’s earnings climbed more than 19% in the first quarter amid strong sales at home.

Costco said it earned $767 million, or $1.73 a share, in the quarter ended Nov.25, up from $640 million, or $1.45 a share, in the year-ago period. Analysts had expected earnings of $1.61 a share.

Revenue rose 10.2% to $35.07 billion from $31.81 billion a year ago. billion. Total same-store sales rose 8.8%. Same-store sales rose 11% in the U.S., 4% internationally and 2.4% in Canada.

E-commerce comparable sales increased 32.3%. On the company’s quarterly call with investors, CFO Richard Galanti said the retailer is installing Amazon-styled lockers in 10 stores in a test as it continues to invest in its e-commerce capabilities.

The warehouse club operator will open 23 net new locations in its current fiscal year, including its first ever in China. The store, in Shanghai, is now under construction.

Costco’s gross margin in the quarter fell to 10.75% from 11.25% in the year-ago period amid higher wages and increased online investments. The retailer also reduced grocery prices amid intense competition in the grocery industry.

Costco currently operates 768 warehouses, including 533 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, two in Spain, one in Iceland, and one in France.