Costco rode strong non-foods results to healthy comparable store gains in its third quarter while reporting it got ahead of tariffs in segments such as appliances and furniture.
Net income for the quarter was $1.9 billion, or $4.28 per diluted share, versus $1.68 billion, or $3.78 per diluted share, in the quarter a year ago.
A Yahoo Finance-published analyst consensus estimate looked for earnings per diluted share of $4.23 and revenue of $63.1 billion.
With the effects of changing gasoline prices and foreign exchange rates included, comparable sales increased 8% year over year in the quarter, with the United States up 7.9%, Canada up 7.8% and Other International up 8.5%, the company reported. E-commerce comps advanced 15.7% year over year.
Traffic was up 5.5% in the U.S., and average ticket, excluding fuel and foreign exchange effects, was up 2.3% from the year-past quarter, Costco Executive Vice President and CFO Gary Millerchip said in a conference call.
Consumers are responding to new non-foods products at Costco, Millerchip said, adding shoppers “remain very choiceful in their spending on discretionary items.” Still, non-food sales grew in the high single digits, according to the retailer. Among the stronger merchandise categories, all up by double digits during the quarter, were housewares, home furnishings, appliances and electronics, gold/jewelry and toys.
Net sales advanced to $61.97 billion from $57.39 billion in the year-prior quarter, the company maintained. Total revenue gained to $63.21 billion versus $58.52 billion in the period a year past. Operating income was $2.53 billion versus $2.2 billion in the year-earlier quarter.
In a conference call, Ron Vachris, Costco president and CEO, said the company is able to manage the challenge posed by higher tariffs and is continuing to offer attractive values to members. He did not speak specifically about any changes in Costco’s financial outlook that might be promoted by higher tariffs.
Vachris said the company continues moving more of its “Kirkland Signature product sourcing into the countries or regions where the items are sold, and this has helped bring us to lower cost and mitigate some of the potential impacts of tariffs. We’re remaining agile as a situation with tariffs evolves, while also supporting the commitments we’ve made with our long-term suppliers. As an example of this, during the third quarter, we rerouted many goods sourced from countries with large tariff exposure to our non-U.S. markets. In the U.S., we pulled forward some items that we had planned for the summer and sourced additional locally produced goods to reduce tariff impacts and ensure that we were in stock. Actions such as these are allowing us to continue to provide great values for our members, while also delivering value to our shareholders.”
Millerchip pointed out items imported from China represent about 8% of total Costco U.S. sales. About a third of Costco U.S. sales are of imported goods and about two thirds of those sales are in nonfoods.
