Costco to go slow on expansion after solid Q1
Costco has revealed plans to scale down its new-store openings for the year, and said it continues t…Costco has revealed plans to scale down its new-store openings for the year, and said it continues to evaluate its fledgling online shopping offer, but has no major plans to expand the same. The comments came even as the warehouse club giant reported low single-digit growth in profit and sales for its fiscal first quarter.
Costco now plans to open 30 new outlets in the current fiscal year, down from 36 previously forecast. Nearly half of the openings will be outside the US, with four in Australia, three in Canada, two of each in Korea, Japan and Spain, and one in Mexico.
CFO Richard Galanti noted that the company expects to open its first two stores in Spain this year, and in France, hopefully, the following year. He added: “We've always looked at Western Europe as a good opportunity for us … We provide good high paying jobs where we’re great competitors and frankly, we see the economy a little better than some of the numbers just read about unemployment.”
The comments came after Costco said net profit for the quarter ending 24 November grew by 2.2% to $425m, with sales up 5.5% to $24.6bn, on like-for-like growth of 3%. Excluding the impact of gasoline price deflation and currency fluctuations, LFL sales were up 4% in the US and 6% internationally, with group LFL sales up 5%.
Galanti said margins in fresh foods were down compared to last year, but added that store traffic was up 4.5% and total membership rose almost 2% to 72.5 million.