Costco has seen a notable rise in fresh-food sales recently, with an increase in the mid- to high single digits. Notably, sales of meat surged, particularly higher-end cuts. Gary Millerchip, Costco’s executive VP and CFO, highlighted that even lower-cost options like ground beef and poultry saw impressive growth.
While beef has faced significant inflation, it’s balanced by drops in prices for other items like eggs and cheese. Bakery products also did well, thanks to new offerings such as holiday dessert bars. The company’s private label, Kirkland Signature, is outpacing overall sales growth, with 45 new items introduced this quarter, including caramelized blueberry croissants.
Overall, Costco’s net income for the quarter rose by 11.3%, reaching about $2 billion, while total sales climbed 8.2% to $65.98 billion compared to last year. Adjusting for tax changes, income growth actually hit 13.6%.
In the U.S., comparable-store sales increased by 5.9%, with digital sales skyrocketing by over 20%. This shift shows how e-commerce is becoming crucial for retailers. In fact, Costco reported a 24% boost in website traffic and a massive 48% jump in app usage. Investments in personalization, where recommendations are tailored based on customer behavior, have been beneficial.
Costco is leveraging technology in various ways, including an AI system that efficiently manages prescription drug prices, keeping stock levels above 98%. This has been vital for growing its pharmacy business and reducing member prices.
In a strategic move, Costco plans to open around 28 new stores by 2026. Although some openings in Spain were pushed back, the company aims to eventually exceed 30 new stores annually.
Amid these developments, Costco’s ongoing litigation against the Trump administration over tariffs continues to garner attention. The U.S. Supreme Court is looking into the legality of these tariffs, which could impact Costco’s financial strategy in the future.
Ultimately, these trends highlight how Costco adapts to consumer needs and technological advancements while navigating challenges in the retail landscape.
Source link
