Costco beats revenue estimates as restrictions ease

FILE PHOTO: Customers queue to enter a Costco Wholesale store in Chingford

(Reuters) -Membership-only retail chain Costco Wholesale Corp reported quarterly revenue on Thursday that beat analysts’ estimates and said it was optimistic about sustained demand for high-margin items, such as jewelry and home furnishings.

Costco, like several other retailers, has benefited from the easing of pandemic-related restrictions and stimulus checks, as more people visited its cavernous stores to buy everything from groceries to sporting goods.

The company said it was beginning a phased return of food sampling and plans to bring back seating at most of its food courts.

Costco added it continued to see strength in its non-foods businesses and its travel division, which offers hotel rooms and cruise tickets to its members, aided by pent-up demand and COVID-19 vaccine roll-outs.

However, the company said it was still pressured by supply delays, higher freight costs and chip shortages, which were impacting deliveries.

“There have been and are a variety of inflationary pressures that we and others are seeing. Inflationary factors abound,” Chief Financial Officer Richard Galanti said.

Costco added it was tackling supply chain delays by adjusting orders.

Comparable sales, excluding the impact of fuel and currency fluctuations, jumped 15.1% in the third quarter, compared with estimates of a 11.46% rise, according to Refinitiv IBES.

Net income attributable to the company rose to $1.22 billion, or $2.75 per share, in the quarter ended May 9, from $838 million, or $1.89 per share, a year earlier.

Analysts on average had expected a net income of $2.34 per share.

Total revenue rose 21.5% to $45.28 billion, compared with estimates of $43.64 billion.

(Reporting by Aditi Sebastian; Editing by Amy Caren Daniel and Shounak Dasgupta)