Can Costco Keep Up Its Momentum?

Costco captured lots of new members, more online shoppers and larger average tickets during a second quarter full of momentum.

For the period ended Feb. 14, net sales at Costco Wholesale increased 14.7% to $43.89 billion from $38.26 billion last year. Same-store sales increased 12.6% in the U.S. excluding the impacts from changes in gasoline prices and foreign exchange. Digital sales were up 80.3%. Average ticket grew by 12% during the second quarter.

During an earnings call on March 4, Costco Chief Financial Officer Richard Galanti said membership at Costco grew 8% during the quarter and that the retailer's member retention rate is now more than 90%. 

Costco reported a profit of $951 million, or $2.14 a share, for the quarter, up from $931 million, or $2.10 a share, in the same period last year. This included $246 million in costs related to wages paid during the pandemic. 

Last month Costco said it would increase its minimum wage by $1 to $16. CEO Craig Jelinek made the announcement during a Senate Budget Committee hearing on pay at large retail and fast-food employers.

Jelinek added that Costco's hourly workers in the U.S. are paid on average above $25.

Costco employs about 180,000 U.S. workers.

“This isn’t altruism,” Jelinek said. “It helps in the long run by minimizing turnover, maximizing employee productivity, commitment and loyalty.” In the U.S., employees average more than nine years with the company, he said.

Jelinek also said the company offers regular raises, bonuses and health care benefits. About 89% of workers are currently eligible for health care coverage, he said.

Issaquah-based Costco operates 787 warehouses worldwide, including 543 in the United States and Puerto Rico. The company, which is No. 5 on Progressive Grocer’s 2020 PG 100 list of the top food and consumables retailers in North America, also has e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea and Taiwan.