Rotisserie chickens are a hot item at Costco Wholesale, Chief Financial Officer Richard Galanti told analysts Thursday during a conference call on the company’s latest quarterly report.
It was his first response to several questions about the Issaquah-based chain’s strong traffic growth. Known formally as “average shopping frequency,” it’s up 5.5 percent for the third quarter ended May 12 and 4.5 percent for the fiscal year to date.
“If you haven’t tried our rotisserie chicken, that’s the new hot dog,” Galanti said, comparing the $4.99 chickens to Costco’s longtime offer of a hot dog and a soft drink for $1.50.
But it clearly was not just hot dogs and rotisserie chickens driving Costco’s third-quarter profit up 19 percent to $459 million, or $1.04 a share, beating Wall Street expectations by a penny.
Most Read Business Stories
- Stunning messages from 2016 deepen Boeing's 737 MAX crisis
- Boeing denies pilot messaging chat shows prior knowledge of 737 MAX flight control problem
- The pros and cons of buying a condo
- Gig Harbor, other cities feel steamrolled by FCC rules on accepting 5G cellular technology
- How Amazon has transformed the Hasidic economy
Revenue also increased, rising 8 percent to $24.1 billion, including $531 million in membership fees.
Televisions, cellphones and a host of other items are doing well — as is gasoline. About 10 percent of Costco’s sales are of gasoline, Galanti said.
“That clearly drives, no pun intended, drives people into the parking lot, and 30 or so of those [shoppers] for every 100 that pump gas go to shop,” he said.
Costco’s online sales rose more than 20 percent in the United States and Canada.
The chain booked a $16.5 million gain in the quarter from a lawsuit that Galanti said he cannot discuss. “It was good, but it’s nonrecurring,” he said.
For the first nine months of the year, Costco posted a profit of $1.42 billion, an increase of 29 percent. That income benefited from a $62 million tax benefit associated with a special cash dividend Costco paid in December to its 401(k) plan participants.
Costco has 627 warehouses, including 449 in the United States and Puerto Rico, 85 in Canada, 33 in Mexico, 24 in the United Kingdom, 15 in Japan, nine in Taiwan, nine in Korea and three in Australia. It plans to open up to nine new warehouses by Sept. 1.
Shares climbed initially Thursday, but closed the day down $1.07 a share, or about 1 percent, to $111.88. The quarterly report came before the stock markets opened Thursday.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org.