Consistent Costco keeps on growing

Costco reported earnings for the fiscal first quarter of 2023, with a robust 8,1% growth in revenues. The growth has been declining since the pandemic peaked in 2020 and 2021. However, the growth is now closer to a historical level.

During this quarter, the growth was driven by international and Canadian businesses, which grew faster than 8%. In contrast, the US business grew by 6,5%, and e-commerce even declined.

The information about Costco's inventory levels was interesting in the quarterly report. Inventories have been a hot topic in the retail industry lately. Inventories have been growing at Costco, also.

However, despite the growth, the inventory levels at Costco are now at a more historical level at 34% of revenue. During the pandemic, inventory levels declined rapidly as the revenues grew explosively. Currently, the inventory levels are normalising.

Unlike many of its peers, Costco is in a relatively good situation with inventories. Costco does not rely so much on general merchandise. It is sold in smaller quantities and turned over rapidly. Costco's assortment is more skewed to food, which turns its inventory much faster.