The warehouse retailer reported fourth quarter sales of $61.44 billion, an increase of 17.5% compared to the same period last year, when sales reached $53.38 billion. The quarter marks the first time Costco reported sales above $60 billion.
The retailer reported higher expenses on labor, including COVID-19 premium wages and sanitation costs of $281 million. For the full year, Costco’s new sales rose 17.7% to $192.05 billion from $163.22 billion the previous year, marking the largest year-over-year growth for the retailer since its 1992 fiscal year, Chain Store Age reported.
Supply Chain Solutions
Like many other retailers, Costco has felt the impact of supply chain disruptions across the industry. Port delays, container shortages, labor cost pressures and workforce shortages, as well as other COVID-19 disruptions, have led the retailer to place its orders earlier. To compensate, Costco is planning ahead and ordering inventory earlier, Richard Galanti, chief financial officer, said during the company’s most recent earnings call with investors. Costco is also making changes in stores.
“We're putting some limitations on key items, like bath tissues, roll towels, Kirkland Signature water, high-demand cleaning-related SKUs related to the uptick in Delta-related demand,” Galanti said.
The lead times for many products have lengthened significantly, he said, with traditional rollout times for furniture and other items increasing from eight to 12 weeks to 16 to 18 weeks. Toys are also in low supply. Other items impacted by chip shortages include: computers, tablets, video games and major appliances.
Costco is actively pursuing supply chain solutions, including chartering its own shipping vessels and leasing containers.
“Despite all these issues, we continue to work to mitigate cost increases in a variety of different ways and hold down and/or mitigate our price increases passed on to the members,” Galanti said. “We've also chartered three ocean vessels for the next year to transport containers between Asia and the U.S. and Canada.”
Each ship chartered by Costco can carry 800 to 1,000 containers, and the retailer expects to make 10 deliveries over the next year. Even as Costco aims to keep prices low for its customers, prices of some items, including oil, coffee and nuts, are at or near five-year highs.