Costco Wholesale Corp on Thursday said mounting worries over the virus outbreak have prompted shoppers to buy in bulk especially on basic necessities like toilet paper and disinfectants, forcing the retail firm to regularly replenish certain items.
Costco is among the popular retailers having a difficult time keeping some products on the shelves as frantic customers scramble to its warehouses to stock up on their needs amid the virus scare. "We are getting orders on a daily basis, but still not enough considering the rising demand on key items,'' Costco's chief financial officer Richard Galanti disclosed in an earnings call on Thursday with stakeholders.
Costco's customer volume rose by 10 percent last month, with most of that rally coming in the last days of the month, which saw virus stories hog the headlines. The retail operator saw growing demand for shelf-durable grocery items, along with sanitation wipes and other cleaning kits. The extra volume depleted stockpiles for some items and Costco also released scattered limitations on buying quantities. "It has been a little crazy the past week," Galanti said.
Separately, the retailer beat Wall Street estimates for holiday-quarter results late Thursday, as the company's recent investments to strengthen its online presence helped it report a 30 percent increase in e-commerce profits in the midst of soaring competition from rivals Amazon and Walmart.
Costco's sales from memberships, which range from $60 to $120 per year and account for most of the US retail operator's gross margin, climbed 6.5 percent to $816 million in the first half ended February 16. Total sales were up more than 10 percent to $40 billion, above projections of $38.4 billion, while adjusted comparable profits of 8 percent also beat analysts' estimates of 5.5 percent.
Online shopping has seen a big increase in profits as well. Sales of items that can safeguard health, like masks, gloves and hand sanitizers skyrocketed 818 percent last month compared with the previous month, based on Adobe Analytics figures.
It is likely that the escalating demand simply pulled forward profits that Costco would have earned this month, but capitalists will get that month's final figures on April 5. At the moment, the retail operator is not witnessing any distortion in either its demand cycles or its capacity to fill its warehouses.
Those metrics, analysts said, could change considering the fluidity of the situation. Meanwhile, Costco's net income increased to $930 million, or $2.10 a share, in the second quarter, from $889 million, or $2.01 a share, compared to the previous period.
