Stronger U.S. Dollar, Dropping Gas Prices Amount to Little Growth for Costco
by Christina Lee on November 6th, 2008
Costco Wholesale’s food sales led a slow growth in the United States this month, though they could not counteract declines in international and total company sales.
In the course of four weeks that ended Sunday, overall U.S. sales rose by 2 percent as international sales fell by 10 percent, summing to a one-percent decline in total company sales.
While other merchandise sales fell overall, food sales continued to rise due to wholesale price inflation. Since September, bakery sales rose by double-digit percentages, while fresh foods sales “continue[d] to be a bright spot in our business,” said Bob Nelson, Costco Wholesale’s head of investor and financial relations.
The company attributes most of the overall slowdown to a strengthened U.S. dollar and with that, weakness in the Canadian dollar, U.K. sterling, and Korean won. October’s drop in gasoline sales also negated the 2.5 percent increase the company saw in September.
In addition, while warehouses saw 2.5 percent more shoppers in October, non-food sales also dropped just as much. Due to price deflation, television sales fell even as the number of units sold continued to increase by 20 percent yearly.
“We believe this is most likely a result of the general status of the economy, and the effects that the current economic condition has on the consumers,” Nelson said.