Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal 2022 and February Sales Results

Costco Wholesale Corporation has announced its operating results for the second quarter (twelve weeks) and the first 24 weeks of fiscal 2022, ended February 13, 2022. Net sales for the quarter increased 16.1%, to $50.94 billion, from $43.89 billion in 2021. Net sales for the first 24 weeks increased 16.4%, to $100.35 billion, from $86.23 billion last year.

Net income for the quarter was $1,299 million, $2.92 per diluted share. Last year’s second quarter net income was $951 million, $2.14 per diluted share, which included $246 million pretax, $0.41 per diluted share, in costs incurred primarily from COVID-19 premium wages. Net income for the first 24 weeks was $2.62 billion, or $5.90 per diluted share, compared to $2.12 billion, $4.76 per diluted share, in 2021.

For the four-week reporting month of February, ended February 27, 2022, Costco reported net sales of $16.29 billion, an increase of 15.9% from $14.05 billion last year. Lunar New Year/Chinese New Year occurred on February 1, 11 days earlier this year. The shift negatively impacted February’s Other International and Total Company sales by approximately 4% and 0.5%, respectively. For the twenty-six week period ended February 27, 2022, net sales were $108.39 billion, an increase of 16.3% from $93.16 billion last year.

Comparable sales for the February and year-to-date periods ended February 27, 2022, were as follows:

4 Weeks 4 Weeks 26 Weeks 26 Weeks
Adjusted* Adjusted*
U.S. 17.4% 12.9% 15.5% 10.8%
Canada 11.7% 8.8% 16.1% 10.1%
Other International -0.9% 1.3% 9.2% 9.7%
Total Company 14.0% 10.6% 14.7% 10.5%
E-commerce 10.2% 10.4% 13.1% 12.8%

*Excluding the impacts from changes in gasoline prices and foreign exchange.

Costco currently operates 828 warehouses, including 572 in the United States and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.

Source: Yahoo Finance
Source: Costco

Loblaw Says Strong Demand Boosting Grocery Sales as Eat-at-Home Trend Continues; Inflation Lifts Prices

Canadian consumers are increasingly shopping at discount grocery chains, buying store-branded food and choosing less pricey pork or chicken rather than beef in an effort to save money amid soaring inflation, Loblaw Companies Ltd. said. The parent company of Loblaws and Shoppers Drug Mart said rising food prices are beginning to shape customer shopping habits.

“They are becoming increasingly price sensitive. There’s no question about that,” Galen G. Weston, Loblaw chairman and president, said during a call with analysts to discuss the company’s fourth-quarter and full-year results. “We see it most notably in the accelerating performance of our discount business.”

The economy is reopening from pandemic lockdowns, which he said could be influencing the return to discount chains such as No Frills and Maxi. Many people favoured one-stop shopping at conventional supermarkets with more selection and services during the pandemic.

Meanwhile, the grocery chain is also seeing early signs of shoppers “trading down” into less expensive product categories. “People will trade down from beef into pork or chicken,” Weston said, adding that while the company would expect that to continue, it’s not yet at an “extreme level.” The retailer is also seeing strength in its so-called control brands, also called private label or house brands, he said.

Meanwhile, the company is working to minimize shelf price increases as suppliers seek to raise prices. “Our shelf price is the tail end of a chain of costs,” Loblaw chief financial officer Richard Dufresne said. “We watch this very carefully and focus on ensuring that our retail prices are competitive.”

The issue of rising costs was thrown into the spotlight after Frito-Lay Canada, one of the country’s biggest food manufacturers, halted shipments to Loblaw stores after the grocer refused to accept a wholesale price hike. The situation has left the chip and snack food aisle of many Loblaw stores stocked with the retailer’s President’s Choice and No Name brands.

The grocer declined to comment on its specific discussions with food suppliers, but Dufresne offered a glimpse into how the price negotiations take place. “We have a team of experts and they deconstruct the cost of each (stock-keeping unit) into its components such as the raw ingredients, packaging, labour and transport,” he said. “Using their analysis, we’re well-positioned to assess the requests that are sent our way.” Loblaw also deals with a large number of vendors, which provides the company with “a very strong perspective on what’s happening on cost increases,” Dufresne said.

Looking ahead, the company said it expects sales will benefit from the ongoing pandemic and higher industry-wide inflation in the first half of 2022. But Loblaw cautioned its grocery and drugstore revenue growth could taper toward the end of the year as easing restrictions dampen its revenue gains and earnings are compared against higher prices last year and its COVID-19 vaccination program.

Meanwhile, Loblaw said its fourth-quarter earnings benefited from strong demand as consumers continued to eat-at-home, particularly over the holiday period. The company said its quarterly profit more than doubled compared with a year ago, boosted by a one-time gain related to a Supreme Court decision on a tax case.

The grocery and drugstore giant said its net earnings available to common shareholders totalled $744 million or $2.20 per diluted share for the 12-week period ended Jan. 1. The result compared with a profit of $345 million or 98 cents per diluted share for the 13-week period ended Jan. 2, 2021.

Revenue totalled nearly $12.8 billion, down from nearly $13.3 billion a year earlier when the quarter included an extra week. Grocery same-store sales – an important metric that tracks sales growth excluding the impact of new store openings – rose by 1.1%, keeping pace with a period of strong demand in 2020 when same-store sales jumped by 8.6%.

E-commerce demand softened slightly in the quarter, dropping 8.4% compared to the unusual surge of 158 per cent at the same time the prior year. For the full year, Loblaw’s online sales grew by 13.9% to $3.1-billion.

Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Financial Post

Chinese E-Commerce Giant Alibaba Reports Slowest Revenue Growth Since Going Public as Competition Bites

Chinese e-commerce giant Alibaba Group Holding Ltd reported its slowest quarterly revenue growth since going public in 2014, as tepid gains in its core business and intensifying competition ate into sales. The slowing Chinese economy has also taken a toll on the company as consumers cut back discretionary spending.

Alibaba said group revenue rose about 10% in October-December 2021 to 242.6 billion yuan ($38.37-billion), marking the first time quarterly sales growth has fallen below 20%. Analysts on average had expected revenue of 246.37 billion yuan, according to Refinitiv data.

Customer management revenue, a key metric which tracks how much money merchants spend on ads and promotions on Alibaba’s sites, fell 1% year-on-year. That marks the first time revenue for the segment, which made up 41% of Alibaba’s total revenue, has decreased since the company’s IPO.

During China’s annual Singles’ Day promotional event in November 2021, the company recorded gross merchandise value growth of 8.5%, a record low. Alibaba is also facing intensifying pressure from rivals like ByteDance-owned Douyin and Kuaishou, which have capitalized on the booming trend of livestreaming e-commerce.

In its fiscal third quarter, Alibaba re-organized its financial reporting of certain business segments to highlight new areas of growth. International commerce reached 16.45 billion yuan, up 18%. Local consumer services, which includes the company’s food delivery apps, generated 12.14 billion yuan, up 27% from a year ago.

Ant Group, Alibaba’s fintech affiliate, reported a profit of about 17.6 billion yuan for the quarter ended September, according to Alibaba’s filings, compared with 15 billion yuan a year ago. Alibaba reports its profit from Ant one quarter in arrears. Ant has been subjected to a sweeping restructuring by China, which derailed its $37-billion initial public offering in late 2020.

In the October-December quarter, Alibaba repurchased approximately 10 million of American Depositary Shares (ADSs) worth approximately US$1.4-billion. For the nine months ending in December, the company purchased roughly $7.7-billion worth of shares, as part of a US$15-billion share repurchase program.

Net income attributable to shareholders slumped to 20.43 billion yuan in the third quarter from 79.43 billion yuan a year earlier. On an adjusted basis, Alibaba earned 16.87 yuan per ADS, above expectations of 16.18 yuan.

Once Asia’s biggest listed company, Alibaba has long given up its crown to Taiwanese chipmaker TSMC, and even fallen behind local rivals Tencent and Kweichow Moutai . The company’s U.S.-listed shares have lost roughly half their value in the past 12 months amid Beijing’s regulatory crackdown on certain industries.

Source: Globe and Mail

Giant Tiger is Proud to Be the Discount Chain With Heart

Deep in the belly of a warehouse swirling with activity, John Hubbard tilted his head and stared into the Matrix. Whenever he had a moment, he’d come to marvel at the towering apparatus before him, a black grid of flickering lights under which the newest members of his team worked tirelessly. They looked like black bugs, or miniature driverless Go-Karts, or villains from the Nintendo universe. But Giant Tiger had harnessed their powers for good, and these pickers could pack pallets like none he’d ever seen. Hubbard, the company’s vice-president of operations, remembered when the consultants first suggested a fleet of robots to work the warehouse. He was fascinated, immediately struck by the engineering and efficiency of it. The machines could pack 3,000 cases per hour, equal to 21 humans.

When Hubbard first pitched the idea, lifers at the company dismissed it. Giant Tiger is a family-owned and family-operated business, and change is tough even for—maybe especially for—the steadiest of ships. “That’s not us,” the employees said. One of them cautiously suggested that if the company wanted technology, it could try installing some conveyor belts. But Hubbard had the CEO on side. When a current of fear ran through the company—surely this meant layoffs—management assuaged it by reassuring its 10,000 employees that no one would be let go, and the human pickers in the warehouse would be reassigned. Hubbard was proud to work for a company that took care of its own. And when Giant Tiger’s new distribution centre opened south of its Ottawa home base in September 2018, he became the only VP of ops in Canada to oversee a team half-human, half-robot. The lanky Hubbard, blue beaded bracelets hanging from his wrist, felt like he was staring into the future, one that operated with a low thrum and the mesmerizing quality of a Tetris game. They’d be able to send thousands more items to the far reaches of the country every day, serving their customers better than ever before. Months later, news of a new coronavirus would make it to the far reaches of the country, too, and with it a crisis the likes of which he’d never seen.

In many ways, Giant Tiger was better prepared than most when the pandemic hit. The company had its own fleet of trucks, carting supplies across the country to its stores six times a week. It had recently invested in a new website that had a selection mirroring in-store stock. Then there were the robots. By fate or good fortune, the company had become the first in Canada to staff its warehouse with a team of robots that picked and packed its cargo. Robots, after all, can’t get COVID-19. What really helped the company thrive, though, was the same thing that has helped it grow from a single shambolic location overlooking Ottawa’s Byward Market to a discount chain with more than $2 billion in annual revenue, and stores in more than 260 towns and cities across the country: the ethos that, at Giant Tiger, everyone is family.

To know Giant Tiger is to love it. From its managers to its customers to the staff stocking its shelves, the company has nurtured a devotion to the brand and its core values that verges on cult-like. “We’re all working together: common values, common goals, people’s common purpose,” says Paul Wood, the company’s CEO. “It’s really just about operating our business in ‘the right way.’ It may sound cheesy or corny, but there’s a way to do things that is fair and equitable and upfront and straightforward. And that’s who we are.” That common purpose? A laser-beam focus on cheerfully getting its customers what they need, when they need it, at the lowest price possible.

If a discount retailer infused with kindness and staffed by robots seems incongruous, that’s because it is, right down to the company’s mascot, a tiger optimistically named Friendly. Where Walmart has saturated its customers with its sheer volume of products, and Dollarama has the dirt-cheap market cornered, Giant Tiger has positioned itself as the discount chain with heart. 

Read the full profile at the Globe and Mail website. 

Source: Globe and Mail