Costco closes in on $5 billion in annual web sales
October 2, 2015 01:49 PM
It’s becoming a familiar annual story for web versus store sales for Costco Wholesale Corp.
Costco, No. 11 in the Internet Retailer 2015 Top 500 Guide, broke out final earnings for the 2015 fiscal year. While comparable sales for its 686 warehouses grew 1%, the web grew 20 times faster and accounted for about 22% of the growth in net sales. Those metrics are about in line with increases Costco has recorded in previous years.
For the 2015 fiscal year ended Aug. 30, Costco reported:
- E-commerce grew 20%. Based on that metric Internet Retailer estimates that web sales reached $4.49 billion compared with $3.73 billion in fiscal 2014.
- Total net sales increased 3.1% to $113.66 billion compared to $110.21 billion.
- Total revenue, including net warehouse sales and membership fees, increased 3.2% to $116.19 billion from $112.64 billion.
- Comparable-store sales for U.S. warehouse locations increased 3% but dropped 5% in Canada and 3% across other international locations.
- Net income was $2.37 billion compared with $2.05 billion.
- The web accounted for 4% of net sales compared with 3.4% a year earlier.
In the past year Costco continued to expand its inventory online, chief financial officer Richard Galanti told Wall Street analysts Thursday on the year-end earnings call. Costco also sees growth in its e-commerce channel as consistent. “We’re pleased with the fact that sales for the last two, three years, at least, (web sales) have been on a year-over-year comparable basis around 20%,” Galanti told analysts according to a transcript on SeekingAlpha.com. “We’re doing it methodically and we’re not going to go crazy out there.”
Costco continues to add more basic items to its web inventory, Galanti told analysts. “We certainly expanded to some extent the SKU selection and added what I would call more frequently purchased items, be it food and sundries or a few office needs, everything from, again, sundry items to health and beauty aids, K-cups, [a] few apparel items,” he told analysts. “And so we’ve expanded that. We took certain key departments and brought them online.”
Despite its classification as a mass merchant in the Top 500 Guide, Costco.com is not trying to become “all things to all people,” Galanti said. “We’re recognizing that we can’t be everything to everybody, that’s not what we do for a living but we have great value,” he told analysts.
For the fourth quarter ended Aug. 30, Costco reported:
- E-commerce grew 20% but didn’t break out specific metrics.
- Total net sales increased 0.7% to $34.99 billion compared to $34.75 billion in Q4 fiscal 2014.
- Total revenue, including net warehouse sales and membership fees, increased 0.7% to $35.77 billion from $35.52 billion in Q4 fiscal 2014.
- Comparable-store sales for U.S. warehouse locations increased 2% but dropped 10% in Canada and 7% across other international locations.
- Net income was $767 million compared with $697 million in Q4 fiscal 2014.