Costco Finishes Year with Sales Up 14%

Costco has demonstrated a solid ongoing performance in a slow-growth economic environment. Net sales for the quarter ended September 2, 2012 were up 14% to $31.52 billion, compared to $27.59 billion for the same period last year. Contributing to the retailer's success are a new e-commerce platform, increased IT CapEx spending and strong membership renewal rates.

 

Costco.com and Costco.ca sales also increased 14% for the quarter. The retailer also launched Costco.com apps for Android and Apple devices as well as transitioned Costco.com and Costco.ca sites to a new platform. The new platform improves visibility of the sites with search engines and the end user experience for the sites. On October 15th, Costco an e-commerce site for the U.K. will go live.

 

"It's only been a week or so and the thing I'm most happy about is there weren't any big glitches and we got it converted in about an eight hour period," said Richard Galanti, chief financial officer for Costco on a recent call with investors. "Closing the old site and opening the new one, so we'll see [traffic conversion and average ticket rates] over time."

 

CapEx spending for 2012 was nearly $1.5 billion, and will increase for fiscal 2013 to meet the number of new openings and investment in operations and infrastructure such as depots in Japan and Taiwan as well as increased investment in IT related to systems modernization projects.

 

The retailer continues to benefit from strong renewal rates rounding up to 90% in U.S. and Canada and 86% worldwide. Membership fee income for the quarter was $694 million, up 18%, an increase of $104 million from the same quarter last year. Gold Star member ships were up to 26.7 million, from 26.4 million at the end of the third quarter. Primary business memberships were up to 6.4 million and add-on business up to 3.8 million at year end.

 

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