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The Key Takeaways
- Costco says that its customers, who are mostly higher-income families, cook at home more.
- Gary Millerchip CFO said some consumers are opting for Wagyu meat, while other customers are looking at lower cost alternatives.
- The store's Kirkland private label now accounts for about a third of Costco's U.S. food sales., executives said.
Costco's higher-earning clientele are cooking at home more often.
Costco’s (COST), a warehouse giant, has observed some unusual shopping trends among its customers who spend more time cooking. CEO Roland Vachris revealed this on a Thursday earnings call. Vachris stated that they are moving to both ends of price ranges, buying high-end products like Wagyu meat, as well as comparatively cheaper alternatives.
"Where we have high-quality premium cuts, they're selling well. But we're also seeing a gravitation towards those lower price per pound items," Vachris said of meat sales, according to a transcript made available by AlphaSense.
Costco reported that same-store sales in the U.S. were 5.2% more than they had been last year. Executives said that meats and produce did well because members were eating at home more often.
Gary Millerchip, the CFO of Costco said that shoppers spend more when they see value in products and are able to buy them fresh. He said that the retailer caters to this need by offering new products under its private label and lowering prices for existing ones, such as chicken stock or sauvignon Blanc.
Prices of private label products are usually lower at retailers than their competitors’. Shoppers have been spending more on Costco's Kirkland Signature brand, which now accounts for about one-third of Costco's U.S. food sales, executives said.
"It's growing a little faster than the rest of the business," Vachris said.
Costco said it had made $1.8billion in profits during its first quarter, compared to $1.59billion a few months earlier. It was the company’s first earnings report since September, when it implemented an increase to membership fees.
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