Costco beats estimates on pandemic boost

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING
FILE PHOTO: Cars fill the parking lot of an open Costco near the King of Prussia Mall which remains closed due to the ongoing outbreak of the coronavirus disease (COVID-19) in Upper Merion Township, Pennsylvania U.S., May 21, 2020. REUTERS/Lucas Jackson

(Reuters) – Costco Wholesale Corp COST.O beat estimates for quarterly profit and revenue on Thursday, as consumers staying at home due to the COVID-19 pandemic bought more fresh produce, appliances and gardening and sporting goods.

Walmart Inc WMT.N, Target Corp TGT.N and other U.S. retailers have seen a surge in demand for video games and home decor as some Americans use their stimulus checks to buy non-essential items.

Traffic at Costco stores also ticked up in the fourth quarter ended Aug. 30, after declining as much as about 20% in April, as government-imposed coronavirus restrictions eased and it brought back food samples.

Revenue from memberships, which range between $60 and $120 per year and account for most of Costco’s gross margin, rose to $1.11 billion from $1.05 billion.

Total revenue rose 12.4% to $53.38 billion, exceeding the average expectation of $52.08 billion, according to IBES data from Refinitiv.

Excluding items, Costco earned $3.04 per share, beating estimates of $2.84 per share.

The company recorded $281 million in COVID-19-related costs as it spent more on employee bonuses and sanitation.

It had earlier projected COVID-19-related costs to exceed $100 million, but had said they would be lower than the $283 million recorded in the third quarter.

Shares of Issaquah, Washington-based Costco, which have gained about 18% this year, were down 2% in extended trading.

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