Big box warehouse retailer Costco's US parent company, Costco Wholesale Corporation, has reported its sales and earnings for the second quarter of its fiscal year (ending 31 August 2014) and for the half year to 16 February 2014.
Net sales for the quarter increased six per cent to $25.76 billion, the same growth rate as for sales in the half, which now total $50.22 billion. Net income for the quarter is down, however, from $547 million in the previous corresponding quarter to $463 million; a decline of 15.3 per cent. Net income for the half now stands at $888 million, down 7 per cent, year-on-year.
Costco does not break out its international sales by region, so it is not clear what the Australian business is performing, at least not in dollar terms. Taking all of Costco's international regions as a whole, comparable sales (excluding gas price deflation and foreign exchange) were up 7 per cent.
In a conference call with investors, CFO Richard Galanti confirmed that one more warehouse is expected to open in Australia before 31 August 2014, as well as new outlets in the United States, the United Kingdom, Japan, Canada and, for the first time, Spain.
Galanti was quizzed by investors as to whether membership fees were inhibiting growth in foreign markets. He said that while Costco was pushing for new members in international markets, including Australia, and was "looking at fees", there were no plans to reduce the cost to join. Costco Australia charges $60 for individuals and $55 for business for a one-year membership, and you must be a member to shop at its five Australian stores (soon to be six when Costco North Lakes opens).
"We have the benefit in most countries of being the only club operator and we'll continue to use that benefit," Galanti said. "We're looking at [fees] but we're not in a hurry to do anything about it."
Later in the conference call, Galanti said TV sales in the quarter were "overall pretty good", but that camera sales "are down quite a bit" due to customers using their smartphones for image captures. Furthermore, Galanti described notebooks as "a tough spot".
