The results come despite supply chain and inflation pressures and the company has raised its inflation estimate.
Costco Wholesale Corporation got off to a strong start in its fiscal year, with earnings, revenue and comparable sales that beat analysts despite ongoing supply chain disruptions and inflation pressures.
On an earnings call with analysts, CFO Richard Galanti said a number of factors were putting pressure on the supply chain and inflation, including port delays, container challenges, Covid-19 disruptions, shortages of various components, raw materials, ingredients, packaging supplies, labour cost pressures and truck and driver challenges. He also said that some inventory won’t make it Christmas, “but we’ve mitigated that as best as possible and feel pretty good about it.”
Galanti also said that, in talking with its merchants, Costco now estimates overall year-over-year price inflation will be in the 4.5 per cent to 5 per cent range. That’s up from the estimate of 3.5 per cent to 4.5 per cent he gave in September on the company’s fourth-quarter earnings call.
“We’ve always said we want to be the last to raise the price and first to lower the price, recognising there’s a limit to what you can do based on these cost increases,” he told analysts. “Ultimately that may include us taking a little less markup. We saw inflation starting several months ago in a bigger way and continuing into this fiscal year. So I think it’s going to continue, but hopefully we’re getting towards the top and it’ll start flattening out and subsiding.”
