Costco Cruises Through Q1

Costco cruised through its first quarter, with the early holiday sales season giving the warehouse club a jump in net sales, comps and net income.

In its fiscal first quarter, Costco Warehouse Corp. recorded company net income of $640 million, or $1.45 per diluted share, versus $545 million, or $1.24 per diluted share, in the year-before period. Net income in the first quarter benefited from a $41 million, or nine cents per diluted share, tax benefit related to a change in accounting rules for stock-based compensation. With one-time benefits excluded, diluted earnings per share topped a MarketBeat analyst average estimate by a penny.

With the effects of fuel and foreign exchange volatility excluded, company comparable sales gained 7.9%, with U.S. comps up 8.7%, Canada comps up 4.3%, and other international comps up 8.2%.

Costco posted first quarter net sales of $31.12 billion, up 13.3% from the period a year earlier. Operating income was $951 million versus $849 million in the quarter a year prior.

E-commerce comps, without fuel and foreign exchange effects, were up 42.1%. In a conference call, Richard Galanti, Costco CFO, said a holiday shift boosted e-commerce comps between five and 10 points.

First quarter traffic advanced 5.9% worldwide and 6.6% in the U.S., Galanti said, while average ticket gained about 2% after excluding fuel and foreign exchange rate impact.

This year’s 12-week first quarter included one less sales day in the U.S. than the 2016 quarter, Costco indicated, due to the shift of the Thanksgiving holiday period this year. Thanksgiving and Black Friday/Holiday weekend sales fell into the first quarter this year versus the second quarter in the prior year. Those factors, in combination, produced an estimated net benefit of approximately 1.5% in the U.S., and slightly less worldwide.