Costco Wholesale Corp. said it expects fresh food to drive sales for the warehouse club company.
Speaking with investors Thursday, Richard A. Galanti, EVP and CFO, said the Issaquah, Wash.-headquartered company anticipates it can increase penetration of fresh foods “because the quality and values are awesome.
“We are the first to go down on proteins and produce, and while I would never be so arrogant to say nobody can catch us, we think we’ve got some great things going on in terms of global sourcing and working with vendor partners.”
He said produce sales are approaching $6 billion, “which is as big as protein,” and as more food retailers achieve similar volumes, “there’s probably going to be a little bit of a macro shift plus there are other players coming into the market with different health and organic related types of retail formats, but we’re pretty good at that too, and we’ve got bigger sizes.
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“So we believe fresh should continue to be an area of increasing penetration that will keep driving our revenues.”
For the 12-week third quarter ended May 8 net income rose 5.6% to $545 million, while sales increased 2% to $26.2 billion and comparable store sales, excluding gas price deflation and foreign exchange, were up 3% for the company overall and for the U.S.
For the 36-week period net income fell 2.5% to $1.6 billion, including the positive impact of $43 million in net non-recurring income tax benefits, while sales increased 2% to $80.3 billion and comps, excluding gas and foreign exchange, rose 5% for the company overall and 4% for the U.S.
Comps in Canada, excluding gas, rose 8% for the quarter and 9% for the year-to-date, while comps in Mexico, Japan, Taiwan and Spain were up 3% for the quarter and 5% for the 36 weeks.
Date: May 26, 2016