Membership Growth at Costco’s Flagship China Store Is ‘Beyond Good,’ Retailer’s CFO Says

CFO also offers insights into Costco’s chicken production, self-checkout plans and new-outlet growth in a recent conference call
Updated: Mon, 12/16/2019 - 10:13
 
 
  • CFO also offers insights into Costco’s chicken production, self-checkout plans and new-outlet growth in a recent conference call
The membership sign-up area at Costco Wholesale's first China store in Shanghai's Minhang District.

Issaquah-based Costco Wholesale Corp. recently beat Wall Street earnings estimates for the fourth-consecutive quarter after posting net income of $844 million for its first quarter ended Nov. 24, up from $767 million the prior year ― while net sales jumped 5.6% year over year to $36.2 billion.

With the announcement of its healthy earnings report, Costco also revealed some interesting tidbits in a recent earnings conference call that offer additional insights into the operations of the fast-growing global retail giant. Leading the conference call with analysts for the company was Richard Galanti, Costco’s chief financial officer.

Among Galanti’s revelations:

* Costco opened three new outlets during the first quarter, all in the U.S.― a business center in Dallas and two new Costco warehouses, one each in Connecticut and Minnesota.

* The company’s Nebraska chicken plant, opened on Sept. 10, is on track to ramp up to a full production and processing level of 2.2 million chickens a week within 45 weeks of the plant’s launch. 

* There are about 135 locations in the U.S. and Canada that now offer self-checkout services, with plans to add another 92 locations in early 2020.

* Finally, with respect to a question from an analyst about membership activity at Costco’s booming Shanghai, China, outlet, which opened in August, Galanti revealed the following:

It's beyond good. …The average Costco in the world has somewhere in the mid- to high-60,000 member households. We have had locations in other countries in Asia where we might be at a 100,000 to 120,000 after a few years, maybe even after one or two years. This one [Shanghai] is more than twice that. So there’s lot of press in a city that is populated with 25-plus million people.”

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