ISSAQUAH, Wash.-With expenses rising faster than sales, Costco reported first-quarter net income of $425 million, up just 2.2 percent from last year’s first quarter.
The bottom line felt the impact of reduced gross margin and rising operating expenses. A 5.3 percent increase in merchandise costs cut 166 basis points from Costco’s gross margin, which finished the quarter at 12.8 percent. Selling, general and administrative expenses increased 7.2 percent in dollars and 17 basis points as a percentage of sales, to 10 percent.
Net sales were up 5.4 percent to $24.5 billion. Gasoline price drops had an effect on Costco’s same-club sales, which for the company as a whole were up 3 percent in the quarter. Excluding gas, same-club sales increased 5 percent.