Costco Sales Rise Ahead of the Holiday Season

A Costco store in Richmond, Calif., on July 11, 2024. Justin Sullivan/Getty Images

Costco continues to gain popularity among superstore/wholesale club shoppers, as evidenced by strong online and in-store sales in October and rising foot traffic in the third quarter.

On Nov. 6, the Washington-based wholesale club reported net sales of $20.03 billion for the four weeks ended Nov. 3, up 7.2 percent from $18.68 billion in the same period last year. In addition, net sales for the first nine weeks of the year were $44.65 billion, up 8 percent from $41.33 billion last year.

The rise in Costco’s sales was led by a surge in e-commerce sales, up 19.3 percent for the four-week period and 21.2 percent for the nine-week period. In-store sales were strong across all geographical regions, led by international sales, up 7.1 percent and 7.9 percent over the two periods.

Costco’s strong October sales follow its strong September sales, when the company reported net sales of $24.62 billion for the retail month of September, the five weeks ended Oct. 6, 2024, an increase of 9 percent from $22.59 billion the previous year.

Costco has been benefiting from the growing popularity of wholesale clubs and superstores among consumers at home and abroad. According to data compiled by Placer.ai, Costco led this trend in the third quarter, with a gain of 7.2 percent in in-store visits. BJ’s Wholesale Club took the second place, up 5.9 percent, and Sam’s Club the third, 5.2 percent.

“Warehouse clubs and superstores were among the retail category’s big winners during third-quarter 2024, with strong visit trends helped by price rollbacks and continued share gains from other food retail channels,” R.J. Hottovy, head of analytical research at Placer.ai, told The Epoch Times in an email.

“These chains continued their momentum into October with strong consumer response to promotional activity, setting them up for a strong 2024 holiday season.”

Costco’s popularity on Main Street has made the company a winner on Wall Street. The stock is up 43 percent year to date and 209 percent over five years, beating the S&P 500, up 26 percent and 94 percent over the corresponding periods.

A high turnover and volume of purchases have allowed Costco to achieve superior investor returns, as measured by a steady rise in the economic value added (EVA), the difference between the return on invested capital and the weighted average cost of capital. According to estimates by GuruFocus.com, Costco’s EVA has remained steady from 2013 to 2023, in the range of 5 percent to 9 percent.

Market segmentation through a membership fee is one factor contributing to the company’s superior returns to its capital holders. This allows the company to attract high spenders to its stores while generating a steady cash flow.

Then, there’s the company’s careful expansion path within its home U.S. market and overseas. Currently, the company operates 892 warehouses, including 615 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand, and Sweden. Costco also operates e-commerce sites in the United States, Canada, the UK, Mexico, Korea, Taiwan, Japan, and Australia.

The company appears to have successfully capitalized on the merging of its online and offline sales.

Customers can place orders online for merchandise to pick up at local stores or have it shipped to them for same-day delivery. This approach has enabled traditional brick-and-mortar retailers to compete more effectively against Amazon.

In another strategy to compete with Amazon, Costco launched Costco Next, which features a wide range of curated products from some of the company’s most trusted suppliers.

Will these initiatives continue to make Costco a winner on Main Street and Wall Street? Investors will find out in future earnings reports, including the report for the first quarter of the 2025 fiscal year, scheduled for release on Dec. 12.