Costco Rides Coronavirus-Fueled Panic Buying

By Sarah Nassauer 

Sales at Costco Wholesale Corp. stores rose as shoppers stocked up on bulk quantities of everyday goods amid the new coronavirus outbreak.

The warehouse club operator reported Thursday a 12.1% jump in comparable sales in the month of February, noting an increase in demand in the final week of the month as concerns about the virus mounted in the U.S.

It could have been even higher. But the retailer has struggled to keep peanut butter, toilet paper, bottled water and other staples in stock in some markets. Long lines have been common around the country and the hashtag #CostcoPanicBuying has circulated on Twitter in recent days.

On Wednesday, Michael LaPayower headed to Costco to buy baby wipes for his 22-month-old daughter.

"They were completely sold old. They usually have two brands," said the 39-year-old software analyst who lives in Staten Island, N.Y. The store had limited bottled-water purchases to five cases per customer. Many employees wore latex gloves, he said.

"I just couldn't believe it," he said. "I have been to Costco before snow storms and they are fully stocked." Instead of baby wipes, he picked up diapers, toilet paper, water and granola bars.

The retailer is moving backup goods as quickly as possible to stores, Chief Financial Officer Richard Galanti told The Wall Street Journal earlier this week.

Target Corp., Amazon.com Inc. and other retailers have said demand for many items is high and some are limiting purchase quantities for certain items or penalizing online sellers for price gouging.

For the quarter ended Feb. 16, Costco reported comparable sales. Those from stores or digital operations open for at least 12 months rose 8.9% during the quarter and 7.9% when excluding the impact of gasoline prices and currency fluctuations.

Net income was $931 million, up from $889 million a year ago. Total revenue rose 11% to $39.07 billion in the quarter and the retailer's e-commerce sales increased 28.4%.

Costco also reported strong sales over the holiday buying season when other retailers, including Target, Macy's Inc. and Walmart Inc. faltered, citing weak sales of some categories such as toys and electronics.

Managing through the demand surge is challenging for retailers. Large companies that sell consumer staples and attract more middle- and high-income shoppers are better placed to gain from the increase in demand, said some analysts. Wealthier shoppers can spend more to stock up.

(END) Dow Jones Newswires

March 05, 2020 17:49 ET (22:49 GMT)

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