Costco Focused On Growing Kirkland Signature Brand
Costco’s Kirkland Signature own brand continues to grow and now has a penetration rate of nearly 33%, according to Ron Vachris, the retailer’s president and CEO.
During the company’s first quarter investor conference call, Vachris noted Kirkland Signature products are growing “a little faster” that the rest of its business. A majority of products sold under the warehouse club’s own brand live in the food and sundries category.
The continued growth in sales of Kirkland Signature products is being driven by two key factors, company officials said. The first is the addition of new products, and the second is Costco’s effort to lower prices on key items.
Among the new items now on store shelves is Kirkland Signature’s oxi powder and Kirkland Signature food storage bags that offer “significant value” to national brand alternatives, according to Gary Millerchip, Costco’s executive vice president and chief financial officer.
On price, he shared a handful of examples during the conference call of recent price reductions on Kirkland Signature branded products; organic peanut butter reduced from $11.49 to $9.99, chicken stock from $9.99 to $8.99, and Sauvignon Blanc reduced from $7.49 to $6.49.
“Kirkland Signature continues to grow at a faster pace than our business as a whole,” said Millerchip. “Our goal is always to be the first to lower prices where we see the opportunities to do so.”
Vachris said Costco’s investment in price is an ongoing goal for the retailer, and the Kirkland Signature brand is at the heart of that effort.
We've got to set that example and start with Kirkland,” he said. “So, we're going to continue to look at those opportunities and invest where we can and keep driving sales.
The importance of the Kirkland Signature brand within Costco was also discussed in the company’s recently released annual report. The company expects to continue increasing the sales penetration rate of its private label assortment, and is focused on maintaining consistent product quality, competitive pricing, and product availability.
“These products also generally carry higher margins than national brand products and represent a growing portion of our overall sales,” the retailer wrote in its annual report. “If the Kirkland Signature brand experiences a loss of member acceptance or confidence, our sales and gross margin results could be adversely affected.”
The growth Costco is seeing with its Kirkland Signature own brands comes as the retailer starts is Fiscal Year 2025 with first quarter sales up 7.5% to $60.99 billion. Net income for the quarter was $1.9 billion, or $4.04 per diluted share, compared to net income of $1.6 million, or $3.58 per diluted share, in the first quarter of the previous fiscal year.
When excluding the impact of changes in gas prices and foreign exchange, company-wide comparable store sales were up 7.1%. By division, comparable store sales in the U.S. were up 7.2%, up 6.7% in Canada, and up 7.1% in Other International. E-commerce comparable sales were up 13.2%.
