Costco Wholesale Corporation may be gaining ground on online retail giant Amazon—and proving its brick and mortar model is sound. The club store announced the results for its second quarter of fiscal 2018, the twelve weeks ending February 18, 2018.
“We continue to improve the online merchandise and services offerings,” noted Richard Galanti, CFO, in a conference call this week. “We're doing a better job of focusing on adding items that are complementary to our warehouse offerings…In sum, we're continuing to expand these activities. It's evolving and improving, and it'll drive our business both online and in the store. Certainly, some of the tax savings will go toward driving that as well.”
Costco’s E-commerce sales grew 28.5 percent during the company’s second quarter—prompting Business Insider to speculate that the club store’s successes could be bad news for Amazon as the online titan expands Prime membership benefits at its recently-acquired Whole Foods stores.
Highlights from the company’s financial report include:
Galanti also noted investments in lower pricing and employee benefits and benefits from recent changes to U.S. tax laws.
“When asked, and we have been, if any of these tax savings will fall to the bottom line, the answer is yes,” noted Galanti. “Most importantly, indirectly, by investing in driving value, we've seen what that does and we know what that does. Much of that investing in value and price comes back in greater earnings, and directly perhaps a little, but again, stay tuned…Overall, we do not expect any major changes to our capital allocations plans. We're generally a net positive cash flow operator notwithstanding CapEx and dividends and what have you. As many others have done, we will use some of these savings to benefit our employees…We'll invest some of the savings to continue to drive greater value to our members. This will certainly include investing in price, as well as other activities.”
See the company’s financial results in their entirety here.