Sharp Food Prices Drive Costco’s Q1 Sales

Food, particularly fresh food, is clearly driving the business at Costco Wholesale Corp., Richard Galanti, the chain’s executive vice president and chief financial officer, said yesterday during a conference call to discuss financial results for the first quarter.

ISSAQUAH, Wash. — Food, particularly fresh food, is clearly driving the business at Costco Wholesale Corp. here, Richard Galanti, the chain’s executive vice president and chief financial officer, said yesterday during a conference call to discuss financial results for the first quarter.

Food and sundries, which account for half of Costco’s business, saw comparable-store sales rise in the high single digits during the quarter, which ended Nov. 23, Galanti said, with dry groceries showing comps in the mid-teens and fresh food close to double-digit gains.

With general merchandise categories weakening, “we brought produce prices down to drive more traffic,” Galanti added — a move that has worked out well, he noted, with produce comps in the double digits.

Net income for the 12-week quarter rose 0.2% to $262.5 million, while revenues, including membership fees, jumped 3.7% to $16.4 billion. Overall company comps increased 1%, with U.S. comps up 3% and international comps down 7%. However, expressed in local currencies, total comps were up 4%, Galanti pointed out, with the U.S. up 3% and international up 7%.

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