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Thursday, October 8, 2009 |
Consumers pull back on big-ticket items, pulling down Costco’s web sales
Shoppers cutting back on their online purchases of big-screen TVs and other luxury goods caused web sales to drop for Costco Wholesale Corp. in fiscal 2009.
For the fiscal year ended Aug. 30, Costco reported:
- A year-over-year decline in web sales of 5.9% to $1.60 billion from $1.70 billion.
- Net sales declined 0.3% to $69.90 billion from $70.10 billion.
- Total revenue, which includes membership fees, decreased 1.5% to $71.40 billion from $72.50 billion.
- Comparable-store sales decreased 4%.
- The web accounted for 2.3% of net sales compared with 2.4% in the prior year.
- Net income decreased 15.5% to $1.09 billion from $1.29 billion.
Costco says sales at Costco.com dropped as more customers cut back their spending on larger items such as electronics and luxury goods. “Our e-commerce business is quite profitable but it was below plan this past year because of the economy,” Costco chief financial officer Richard Galanti told Wall Street analysts on the company’s year-end earnings call. “These results were certainly impacted this past year, given our big ticket and discretionary type of products. In the fourth quarter our sales were down about 7% but we actually showed a slight increase in September.”
Costco, which doesn’t break out quarterly web sales, says total revenue in the fourth quarter ended Aug. 30 was negatively affected by the ongoing weakened economy and higher health care costs.
For the fourth quarter, Costco, No. 14 in the Internet Retailer Top 500 Guide, reported:
Net sales declined 3.1% to $21.90 billion from $22.60 billion.
Total revenue, which includes membership fees, decreased 3% to $22.40 billion from $23.10 billion in the prior year.
Comparable-store sales decreased 5%.
Net income decreased 6% to $374.0 million from $398.0 million.
"Fiscal 2009 results, including those of the fourth quarter, were negatively impacted by ongoing softness in U.S. sales, primarily the result of a weak economic environment, and higher employee benefit costs, mainly consisting of higher health care eligibility and usage,” Galanti told analysts.
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