Dive Brief:
- Costco recorded global net sales of $61 billion during the first quarter of fiscal 2025, up 7.5% from the same period last year, the club retailer reported last Thursday.
- Comparable-store sales in the U.S. excluding fuel rose 7.2%, the company’s best quarterly performance by that measure since the first quarter of fiscal 2023. Net income was up by more than 13%, to $1.8 billion.
- Costco’s private label penetration has grown to just under 33%, led by food and sundry sales, President and CEO Ron Vachris said during an earnings call on Thursday.
Dive Insight:
Costco benefited during its latest quarter from a strong interest by its shoppers in groceries, a trend that has bolstered its Kirkland Signature private label line, CFO Gary Millerchip said during the call.
Sales of fresh foods rose in the high single digits, while meat sales were up by double digits, Millerchip said. Shoppers have been gravitating toward pork, poultry and beef that costs less per pound even as they also show strong interest in premium cuts of meat, he added.
“[W]e are seeing what we think is a little bit of a shift from food away from home to food at home, and that’s certainly reflected in strong meat and produce sales that we’ve seen,” he said.
Millerchip said Costco’s Kirkland Signature private label grew more quickly in Q1 than Costco’s overall business and noted the company reduced prices on a number items in the line during the period, which ended Nov. 24. For example, Costco lowered the cost of Kirkland Signature organic peanut butter by $1.50 and chicken stock carrying its house brand by $1, said Millerchip, who joined the retailer in March from Kroger.
Costco is expanding its footprint against the backdrop of brisk sales it is seeing. It plans to open about 30 new locations annually during the next several years, with just under half being outside the U.S., according to Vachris.
Vachris noted that Costco’s newest location, in Pleasanton, California, generated $2.9 million in sales the day it opened — the highest-ever opening-day sales for a U.S. location in the company’s history. Costco currently operates 897 warehouses, including 617 in the United States and Puerto Rico.
Vachris also said Costco is not interested in adopting scan-and-go technology and is focusing instead on self-checkout, which he said “has been a great option for our members.” By contrast, rival Sam’s Club has invested deeply in scan-and-go capabilities and seen strong adoption of the technology by its customers.
“We do hear [about] it randomly, but we’re going to keep an eye out there on technology and make sure that we’re doing our part to keep the experience as strong as we can for our members,” Vachris said about scan-and-go.
