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Industry NewsCostco reports double-digit sales growth but freight, labour costs impact margins

Costco reports double-digit sales growth but freight, labour costs impact margins

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Costco Wholesale Corporation delivered double-digit sales growth in Canada and the U.S., the big box store says soaring freight and labour costs impacted gross margins impacted margins for the third quarter of fiscal 2022.

Comparable sales were 15.2 per cent higher in Canada and 16.6 per cent higher in the U.S. Comparable sales for the other international markets were up 5.7 per cent. E-commerce sales increased 7.4 per cent during the quarter.

During an earnings call with investors, Bob Nelson, senior vice president, finance and investor relations, commented on inflationary pressures.

“Pressures from higher commodity prices, higher wages, higher transportation costs and supply chain disruptions are all still in play. For Q1, we estimate price inflation was in the 4.5 per cent to 5 per cent range,”noting for Q2 the company had estimated inflation to be about 6 per cent. For “And for Q3 and talking to our merchants, estimated price inflation was in the 7%-ish range.”

In the third quarter, Costco’s gross margins dropped by 99 basis points.

Costco’s total revenue rose 16 per cent to $52.60 billion in the quarter ended May 8, compared with estimates of $51.71 billion, according to Refinitiv IBES data, as reported by Yahoo Finance.

E-commerce growth

Costco saw e-commerce growth across all departments, and noted that grocery continues to grow. “Costco grocery, including our third-party delivery, two-day dry, fresh and frozen, continues to grow, up in the low double digits in the quarter,” notes Nelson.

 

 

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