Costco made broad gains in its second quarter, growing well beyond Wall Street expectations as the retailer continues to expand its grocery delivery services as well as buy online, pickup in store.
The company posted net income of $889 million, or $2.01 per diluted share, compared with $701 million, or $1.59 per diluted share, in the year-earlier period. Costco trounced a MarketBeat-published analyst consensus earnings estimate of $1.69 per share.
For the period year over year, comparable sales, adjusted to exclude the effects of gasoline price volatility, foreign exchange fluctuation and an accounting change, advanced 7.2% in the U.S., 6% in Canada and 4.8% in other international markets for a total of 6.7%. E-commerce comps gained 25.5%, adjusted.
Net sales for the quarter increased 7.3%, to $34.63 billion from the year-previous quarter. Membership fee revenue gained to $768 million from $716 million in the 2018 period. Operating income was $1.2 billion versus $1.02 billion in the quarter a year before.
For February, Costco posted net sales of $10.72 billion, an increase of 5% from the month a year previous. For February, year over year, adjusted comps for the month gained in the U.S., by 5.7%, and Canada, by 4.8%, but fell in other international markets by 1.2% for a total of 4.6%. E-commerce comps gained 21.6%, adjusted.
In a company conference call, Richard Galanti, Costco evp and CFO, said growth segments in the second quarter included grocery, consumer electronics, hardware, health and beauty aids, tire, automotive, toys, seasonal and apparel. He added that Costco’s same-day grocery delivery service has expanded to include members within a short drive of 99% of the company’s locations. Costco members can get two-day grocery delivery throughout the continental U.S.
Costco also continues to improve its online and in-line cross-marketing initiatives, he added, driving business. Costco expanded buy online and pickup in store in the quarter, and it has continued to monitor a test of pick-up lockers in 10 locations that is part of the program.