Costco reported 3rd quarter 2023 results. Total company sales decreased 0.3% or $53.6 billion in the 12 weeks ended May 7, 2023. In the previous year the company reported 53.0 billion. Without the impact from changes in gasoline prices and foreign exchange the company adjusted sales would be an increase of 3.5% in the quarter. E-commerce dropped -10%.
Net income attributable to Costco was $1,302 million compared to last year’s $1,353 million. Diluted shares were $2.93 per diluted share compared to $3.04 per diluted share in 2022. There were about 566 fewer shares outstanding at the end of this year’s third quarter than at the same time last year.
Management discussed the effect of lower inflation. During the height of the pandemic inflation was about 8% to 9% according to Richard Galanti, CFO
The company now operates 853 warehouses including 567 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 32 in Japan, 29 in the United Kingdom, 18 in Korea, 11 in Taiwan, 14 in Australia, 4 in Spain 3 in China, 2 in France and one each in Iceland, New Zealand and Sweden. A fifth warehouse opened in China yesterday and another one is under construction. E-commerce sites are in the U.S., Canada, the U.K., Mexico, Korea, Taiwan and Australia. 19 new stores will be opened by the end of the fiscal year which includes 3 relocations. It is likely that net year openings may amount to about 26 warehouses.
Membership is at an all-time high and renewals are over 90%.
POSTSCRIPT: Management is dedicated to their member-customers the best values in every classification of merchandise. Operating on low margin in every classification, Costco has a loyal customer base that frequently shops the stores. Management is now working on strengthening the e-commerce business, which fell off as customers started to save by avoiding purchase of discretionary items. Home merchandise, that was strong during the pandemic, have now dropped off. Just like management eliminated published books, one can now look for trimming some other classification. It is a great management that fights for share of market.