Costco Wholesale Corporation (NASDAQ: COST) shares fell a little over 1% Friday as they announced that though sales surged in the early stages of the pandemic, the stay-at-home orders caused it to lose out on larger earnings.
The company reported that in the first weeks of the pandemic, consumers bought out bottled water and stocked up on groceries, causing its fiscal third quarter sales to skyrocket. As of May 10th Costco earned USD1.89 per share compared to last year’s USD2.05, had a revenue of USD37.27 Billion in comparison to USD34.74 from last year and saw same-store sales increase by 4.8%.
However, the flood of consumption dwindled down in April as people confined themselves to their homes. The multinational corporation admitted that “stay-at-home orders, social distancing requirements and some mandatory closures” caused a large strain in sales. Ultimately, Costco same-store sales dropped 4.7% worldwide throughout four weeks, ending May 3.
According to the retailer, the global pandemic called for added wages and hygiene expenses that slashed profits by USD283 Million or USD0.47 per share. Additionally, due to the unexpected crisis, consumers stuck to food purchases, leaving other merchandise such as luggage and jewelry sales to suffer.
Costco’s Chief Financial Officer, Richard Galanti, said the company has “been fortunate that we’ve been open” also acknowledging that the store layouts provide safety many feel comfortable with.
“When you talk to people anecdotally, they feel frankly more comfortable coming into a Costco which is bigger, more wide open, with certainly the six feet apart that we’re all doing,” he said.
Furthermore, the company took it upon themselves to add additional restrictions to slow the spread of COVID-19. Such restrictions accounted for a lower number of shoppers within the stores, fewer workers within each department as well as prohibited seating in the food court.
As a preventative measure, the retail giant now requires that all customers wear face masks in the stores, a decision that was not well received by all.
“There are people who don’t like it, but most people do,” Galanti said.