Costco Wholesale Corporation (NASDAQ: COST), the world's largest club-type self-service warehouse (shop) chain, reported fiscal Q3 2021 results. The company's revenues increased 21.5% YoY to $45.28 billion.
Operating income rose 41% YoY to $1.66 billion, also beating market forecasts of $1.41 billion. Net income rose 45.6% to $1.22 or $2.75 per share. The main reasons for this strong performance were the economy recovering from the pandemic, customers returning to shops and a planned reduction in expenses related to COVID-19.
Comparable sales for Q3 FY 2021 were as follows. In the 12-week period, net sales in the US increased by 18.2%. Canada reported an increase of 32.2%. The international segment showed growth of 22.9%. Overall, the company reported growth of 20.6%. E-commerce grew 41.8%.
Costco, like some other retailers, benefited from easing pandemic restrictions and stimulus checks as more people visited its warehouse shops to buy everything from groceries to sporting goods. The company said it was beginning a phased return to product culling and planned to bring back seating for most of its food courts.
Costco added that it continues to see potential in its non-food business and travel division, which offers members hotel rooms and cruise tickets, demand for which has been held back by COVID-19 restrictions.
However, the company said it was still under pressure from supply delays, higher transport costs and chip shortages.
The Fresh Foods category has once again become a major driving force. Thanks to high sales of Fresh Foods, the company was able to benefit from improved productivity and a significant reduction in rejects. Meanwhile, the other three main product categories, Food Sundries, Softlines and Hardlines, also had a higher margin percentage compared to the same period last year.
Because of its business model, Costco is more dependent on its warehouse shops and has to incur higher staff costs and security measures under COVID-19. The average hourly wage for employees is $16, which is a dollar higher than rivals Amazon and Target.
Costco is actively developing its e-commerce channel, and it is growing at a significant rate, but its share of total sales is currently small.
