Costco Wholesale kept up double-digit net and comparable sales gains in July but saw growth tail off due to the Independence Day calendar shift.
For the four weeks ended July 31, net sales advanced 10.8% to $16.85 billion from $15.21 billion a year earlier, Issaquah, Wash.-based Costco reported. That compared with 16.6% year-over-year net sales growth in July 2021.
Net sales in the 48-week year-to-date period came in at $205.19 billion, up 16.4% from $176.3 billion in the prior-year span.
Companywide, comparable-club sales climbed 10% in July and were up 7% excluding changes in fuel prices and foreign exchange (FX) rates, versus year-ago comp-sales growth of 13.8% (8% excluding fuel and FX).
By business unit, July comp sales rose 11.4% in the United States (5.8% excluding fuel and FX), 11.7% in Canada (11.5% excluding fuel and FX) and 0.7% internationally (9.4% excluding fuel and FX), Costco said .
This year’s July selling period had one fewer shopping day in the United States because of the timing of July Fourth holiday, which fell on a Monday versus a Sunday in 2021. Costco said the shift negatively impacted companywide net and comp sales by about 2.5% and US net and comp sales by approximately 3.5%.
July’s results continued the momentum from June, when Costco posted an 18.1% increase (13% excluding fuel and FX) in overall comp sales, including 21.5% growth (13.2% excluding fuel and FX) in the US
E-commerce climbed 10.2% on a comparable basis in July and were up 11.5% excluding FX. That compared with a 7% uptick in June (8% adjusted) and a July 2021 gain of 7.4% (5.7% adjusted).
“Our comp traffic, or frequency, for July was up 4.6% worldwide and 1.6% in the US, including the negative impact from the holiday shift,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a phone report. “The average transaction was up 5.1%, which included the benefit from gasoline inflation and the negative impact from FX,” he added.
FX rates relative to the US dollar negatively impacted net and comparable sales 2.2% for the company overall in June, including 3.7% in Canada and 12.4% in other international markets, according to Sherwood. Fuel price inflation boosted total reported comp sales by roughly 5.2%, he said, adding that the average worldwide selling price per gallon was 40% higher in July compared with a year earlier.
US regions and markets posting the strongest comp-sales results in July were the Midwest, San Diego and Southeast, and the strongest international comp-sales results came from Australia, Spain and the United Kingdom, Sherwood said, noting that inflation in July was consistent with the previous month.
“Moving to merchandise highlights,” Sherwood said, “the following comparable-sales results by category for the month exclude the impact of foreign exchange yet include the negative impact of the calendar shift. Food and sundries were positive in the low double digits. Cooler, sundries and frozen foods were the strongest departments. Fresh foods were up low to mid-single digits; better-performing departments included bakery and produce. Nonfoods increased low to mid-single digits. Better-performing departments included toys and seasonal, garden, tires and sporting goods. Ancillary business sales were up low-30s. Gas and food court were the top performers.”
Costco currently operates 834 warehouse clubs overall, compared with 813 a year ago. By market, the retailer operates 575 clubs in the US and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland. Costco also runs e-commerce sites in the US, Canada, the UK, Mexico, Korea, Taiwan, Japan and Australia.
“July comps were +10% (down 810 basis points month to month) versus 4Q comps of +10.6% and our previous estimate of +15.1%, including a 250 basis-point headwind from one less selling day versus last year,” Jefferies analyst Corey Tarlowe wrote in a research note. “While all categories slowed down versus June, this makes sense to us, given recent commentary by other retailers calling out softness in July. Notably, inflation overall was similar to June.”