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Source: Company reports/StreetAccount[/caption]
Costco’s January Comps Misses Expectations But E-Commerce Continues to Shine
Source: Company reports/StreetAccount[/caption]
Costco’s January Comps Misses Expectations But E-Commerce Continues to Shine
- Costco grew January same-store sales 5.2% year over year, missing the consensus estimate of 6.0% and lower than December’s 6.1%.
- Costco’s e-commerce comparable sales were up 22.1% in January, strengthening considerably from 13.6% growth in December 2018.
- In January, comp traffic at Costco was up 5.1% in the U.S. and 4.9% worldwide.
- The retailer’s strongest results in the U.S. were in the San Francisco Bay Area, San Diego and the northeast. Internationally, Costco saw strong sales growth in Spain, Taiwan and Korea.
- Foreign currency fluctuations negatively impacted the overall company’s comps by 160 basis points. Canada was hurt by about 660 basis points, while international comp sales were negatively impacted by approximately 450 basis points.
- Cannibalization (existing warehouses losing sales to new ones) negatively impacted the U.S. by about 50 basis points, Canada by also 50 basis points and other international segments by approximately 90 basis points. Overall, the company was negatively impacted by 60 basis points.
- For fiscal 2019, Costco adopted revenue recognition standard ASC 606, and this new revenue recognition benefited sales by approximately 30 basis points for both the U.S. and the total company.
- Costco grew food and sundries same-store sales by mid-to-high single digits. Departments that saw the strongest comp growth were tobacco, candy and liquor. Hardlines were up by high single digits. The better-performing departments included tires, postage and majors.
- The company grew softline comps by high single digits. Departments that performed well included apparel, housewares, small appliances and special-order kiosks. Fresh foods were up by high single digits. The better-performing departments included meat and service deli.
- In the ancillary business segment, hearing aids, food court and optical saw the strongest comp sales increases during the month. Gasoline price deflation negatively impacted Costco’s total reported comp sales by approximately 100 basis points. The average selling price of gasoline per gallon was down 8.4%, to $2.49, compared with $2.72 last year.
- L Brands reported comparable sales of (1)% this January, compared to flat growth posted in December 2018. Victoria’s Secret’s same-store sales were down 1%, while comps at Bath & Body Works stood flat. Victoria’s Secret and Bath & Body Works had reported comparable sales growth of (6)% and 11%, in December 2018, respectively.
- L Brands’ merchandise margin rate was down significantly in January compared to last year, due to increased promotional activity at Victoria’s Secret.
- Inventories per square foot as of the end of January declined 3% year over year.
- At Victoria’s Secret, comps were negative due to declines in lingerie and PINK. In February, the company will focus its lingerie business on Valentine’s Day and the PINK business on the girl power campaign.
- At Bath & Body Works, comps were flat, as lower inventory levels led to reduced promotional activity for the month. The brand’s merchandise margin for the month was up compared to last year, driven by lower promotional activity, partially offset by higher supply chain costs.
- Buckle reported that comparable sales fell 2.2% year over year in January, compared to a 0.2% decline in December 2018. Net sales declined 17.9% year over year.
- Total sales in the men’s business were up 1.0% year over year. The men’s segment accounted for approximately 50% of total sales in January 2019, even with 49.5% in January 2018. Price points were down 2.5% for January in the men’s segment.
- Total sales in the women’s segment fell 2.5% year over year. The women’s segment accounted for 50% of total monthly sales in January 2019 versus a slightly higher 50.5% share in January 2018. Price points were down about 5.5% in the women’s business.
- Accessories sales fell 4.0% year over year in January and accounted for 7.5% of total sales. Footwear sales grew 15% year over year and represented 6.5% of total sales. Average accessory price points were down 5.5% and average footwear price points were down 3.5%.
- In the current month, units per transaction grew 5.0% and the average transaction value increased about 1.5%, year over year, respectively.
- Cato’s sales fell 17.9% year over year to $44.5 million. Comparable sales grew 2% year over year in January, compared to flat growth in December 2018.
- As of February 2, 2019, the company operated 1,311 stores in 31 states, down from 1,351 stores in 33 states as of February 3, 2018. During January, Cato closed five stores.