Costco Sees Surge In Footfall Following Coronavirus Outbreak
Costco Wholesale Corp has said concerns over the coronavirus outbreak have prompted customers to stock up on essentials, including disinfectants, forcing the warehouse operator to replenish certain items frequently.
The company has lately been seeing a surge in footfall as customers queue up at its US stores, similar to the holiday season, which has forced it to place quantity limits on some products.
Some of the frequently purchased items include bleach, bottled water, dry grocery items, sanitising wipes, sanitisers and water filtration products.
"We're getting deliveries daily, but still not enough given the increased levels of demand on certain key items," chief financial officer Richard Galanti told analysts, and added that shopping frequency has been off the charts.
Costco said its February comparable sales, on an adjusted basis, rose 11.7%, adding that concerns related to the virus outbreak had boosted comparable sales by about 3%. The company added the rise in traffic has been continuing into March.
"Given its bulk retailer pure-play status, we see Costco as the primary beneficiary of the widespread coronavirus-related consumer stockpiling," CFRA research analyst Garrett Nelson told Reuters.
Separately, Costco topped market expectations for holiday-quarter results, as its recent investments to boost online presence helped it post a 28% increase in e-commerce sales amid stiff competition from rivals Walmart and Amazon.com.
Revenue from memberships, which range from $60 to $120 annually and account for most of Costco's gross margin, rose 6.25% to $816 million in the second quarter ended Feb. 16.
Total revenue rose over 10% to $39.07 billion, above estimates of $38.24 billion, while adjusted comparable sales of 7.9% also beat Wall Street expectations of 5.63%.
Net income attributable to the company rose to $931 million, or $2.10 per share, in the second quarter, from $889 million, or $2.01 per share, a year earlier.
Analysts on average were expecting the company to earn $2.06 per share, according to IBES data from Refinitiv.