Costco announced on Wednesday that its sales were down -- for the first time -- last month because of stay-at-home orders, social distancing and some compulsory closures.
Costco's global revenue at outlets open for at least 12 months dropped 0.5 per cent in April, excluding petrol prices and currency fluctuations, compared to figures in 2019.
Last month, profits at Costco fell 4.7 per cent, including lower gas rates and currency fluctuations. It was the first month that profits of the retailer have plunged in many years. Costco credited this loss to the impact of the ongoing global health crisis that led to decreased traffic and sales.
Limited service in travel and foodcourts, shutdown in most of the company's departments for optical, hearing aid and imaging departments, and weak volume and price decrease in the oil market negatively affected its April sales by an estimated 12 percent.
Costco posted a 12.1 per cent rise in February as shoppers started to stock up before the pandemic, and a 9.6 per cent rise in March as fewer consumers went outside their homes. Comparable sales in April dropped 4.7 percent, while e-commerce rose 85.7 percent as consumers moved online to meet their needs.
Data from retail-monitoring firm Placer.ai released in mid-April had shown that Costco "continued to see minor declines in traffic," although the tempo of these declines levelled off significantly, potentially setting up a new normal for in-store traffic.
Reductions started as stocking-up activity began to pull back in the latter part of March. Costco's e-commerce sales for the four-week period increased by 85.7 per cent.
Analysts say the market remains solid for Costco, following last month's slowdown. As department stores and mall-based brands falter, Costco and rival big box retailers including Walmart and Target have been strengthening their grip on US customers.
In a memo to clients Wednesday, Telsey Advisory Group analyst Joseph Feldman said they continue to expect Costco to remain a "share gainer" with good revenues and high membership renewal rates.
Despite the slight decline in sales, analysts told Investors Business Daily that Costco is actually in a great position to be successful as they provide grocery delivery and online shopping, two things clients may be more comfortable with as social distancing restrictions are eased. Also, as of this week, the company announced that several stores will go back to regular operating hours.
UBS market strategists estimate Costco to benefit from those customer practices implemented during the COVID-19 pandemic.
