Holiday and Super Bowl sales of big-screen TVs helped drive up Costco’s CE comps by the low to mid-teens during its second fiscal quarter.
The tech results, detailed during an earnings call yesterday, represent the wholesale club’s best CE and TV dollar increases by percentage in the past few years, chief financial officer Richard Galanti said.
Costco’s second quarter covers the three months ending Feb. 14, spanning Black Friday, Christmas, Super Bowl and Valentine’s Day.
On the call, Galanti said the company outpaced the industry in sales of large-panel TVs.
“In talking to every major supplier that we buy from, relative to everybody else online and offline, I know that during the four weeks between Thanksgiving and Christmas we had outsized TV sales dollars,” he told analysts. “I think part of that is over-indexing to the 60-inch and 80-inch TVs.”
Galanti said the chain is also seeing strength in mobile phones, and that camera sales have improved after two years of soft demand.
He noted that CE represents 4 to 5 percent of Costco’s total sales volume, and that TV sales comprise better than 40 percent of its CE mix.
Net sales for the quarter rose 3 percent to $27.6 billion; total comps increased 4 percent excluding the impact of lower gas prices; and earnings fell 9 percent to $546 million due to unfavorable currency exchange rates, the company’s co-branded credit card transition from Amex to Visa, and investments in IT modernization.
In other Costco news, which will also affect earnings, Galanti announced that it was increasing the starting pay of employees from $11.50 to $13 an hour effective this month, representing the first entry-level increase in nine years.
Longtime workers at the top of Costco’s pay scale earn about $23 an hour, among the highest rates in retail. Costco’s high wages have irked investors, but management believes that happy employees help ensure a positive shopping experience for customers.