Costco growth slows with stable inventories and margins

The American warehouse club retailer Costco reported slowing growth. Despite the growth slowdown in 2022, Costco still grew with relatively robust numbers.

The net sales of Costco grew by 6,5%, whereas the membership fees grew by a little less: 6,2%

During a time with big problems due to high inventories for many non-food retailers, Costco kept its inventory levels compared to revenues relatively stable over the pandemic.

Inventories in control

During early 2022 the inventory levels increased slightly compared to revenues, but that has been managed as the inventories decreased during the last quarter. Unlike other retailers, such as Target, Costco has been able to fix the inventory problems without significant ramifications for the gross margins. Gross margins have remained relatively stable at around 12%.

On the other hand, Costco is famous for keeping its margins relatively stable over time.

Of Costco's different business segments, the international part has reported the most robust growth during the last 26 weeks. The international segment grew adjusted to the currency changes by 9,4%, whereas the US business grew by 6%.

Outgrowing the market

Despite the slowing growth, Costco has grown faster than the overall market for warehouse clubs and superstores in the US. Costco's growth has outpaced the market growth for 11 consecutive quarters. Since the start of 2016, Costco has grown slightly less than the market during two quarters only.