Costco Wholesale Corporation reported operating results of their first quarter 2023 ended November 20, 2022. That is three days before Thanksgiving Day. Net sales increased for the first quarter by 8.1 percent to 53.44 billion from $49.42 billion achieved in the first quarter last year.
Comparable sales were for the U.S. 9.2%, Canada 2.4%, Other international 3.1%, total company comparable store sales were 6.6 %. E commerce comparable sales were -3.7%. However, the adjusted comparable store sales are quite different since they exclude the impacts from changes in gasoline prices and foreign exchange. Adjusted rates for U.S. as 6.5%, Canada 8.3%, Other international 9.1%. Total company adjusted rate was 7.1%. E-commerce was -2.0%.
The company’s revenues were $53.44 billion. Earnings per diluted share was $3.07 compared to $2.98 last year. Slower sales of appliances and furniture were cited by Mr. Richard Galanti, Chief Financial Officer of the company. Fruit and sundries continue to be in strong demand. Furniture, major appliances and electronics were best sellers last year.
The company was asked about inflation, and Mr. Galanti said that while there were some pockets with less inflationary pressure, that overall, there still was inflation increases on much of the merchandise. However, there was relief in shipping costs. For instance, the company sold their seven cargo ships and many containers since a more normalized environment has developed and management felt it would be beneficial for members to have merchandise delivered in the traditional way. He indicated that Costco did not want to be in the shipping business.
Mr. Galanti stress that fruit and sundries some of the top sellers and he stressed that Costco’s priority is to sell merchandise at value prices at all times. As a matter of fact, he pointed to instance, $4.99 chicken and $1.50 hot dogs that reinforced Costco’s pricing principles. Management is determined to hold prices.
During the analyst’s meeting Mr. Galanti was asked about the special dividend that the board granted two years ago. He indicated that the board might want to wait to see if there is going to be a recession before it considers another special dividend.
POSTSCRIPT: The company is run very tightly with excellent controls. Inventory is up only 3.7% to $18,571 million from $17,907 last year. Everything management does it to help the company’s profitable performance. I am excited for the profitable progress of the company.