Costco’s Sales Rise Ahead of Earnings Report. What’s Fueling the Growth.

Shoppers inside a Costco store in Napa, Calif. (David Paul Morris/Bloomberg)

Key Points

• Costco’s fiscal first-quarter sales rose 8.2% to $65.98 billion, excluding membership fees, with comparable sales up 6.4%.
• Digitally enabled comparable sales for the quarter increased 20.5%, indicating significant e-commerce growth for Costco.
• November net sales reached $23.6 billion, an 8.1% year-over-year increase, with comparable foot traffic up 3.8% worldwide.

Costco Wholesale released both its November and fiscal first-quarter sales. Both rose at a healthy clip, fueled by growth in e-commerce.

Fiscal first-quarter sales were $65.98 billion, an increase of 8.2% from a year ago. This figure doesn’t include any revenue stemming from Costco’s membership fees, which will be disclosed on the company’s Dec. 11 earnings report.

Total company same-store sales for the quarter ended Nov. 23 increased 6.4% from a year ago, ahead of analysts’ expectations for a 5.8% increase, according to FactSet. Digitally enabled comparable sales jumped 20.5% in the quarter, reflecting how Costco is making inroads in e-commerce despite being slow to the uptake.

Given the quarter’s cutoff date, any Black Friday weekend revenue won’t be reflected in the quarter.

It was, however, included in Costco’s monthly sales report for November, which had a cutoff date of Nov. 30. Total-company same-store sales accelerated to 6.9% last month from October’s 6.6% gain.

Net sales for November were $23.6 billion, up 8.1% year over year. In October, sales increased by 8.6%.

Top-performing categories included candy, food, sundries, meats, bakery, jewelry, and health and beauty, said Andrew Yoon, director of finance and investor relations.

Costco said comparable foot traffic increased 3.8% worldwide in November, while the average transaction rose 3%.

Costco stock dipped 0.5% in after-hours trading to $917.25. Shares are roughly flat this year, gaining just about 1% while the S&P 500 has increased 16%.

Write to Sabrina Escobar at sabrina.escobar@barrons.com