Kirkland Signature Outpaces Costco’s Q3 Sales Growth
Third-quarter sales at Costco were up 8%, but the star of the 12 weeks ended May 11 was the retailer’s Kirkland Signature own brand, sales of which outpaced the company’s overall sales growth by 0.5%.
Companywide, total sales were $61.96 billion, up from sales of $57.39 billion in the comparable quarter the previous year. Net income for the quarter was $1.9 billion, or $4.28 per diluted share, compared with net income of $1.7 billion, or $3.78 per diluted share, in the third quarter of the prior fiscal year.
Total company comparable store sales in the third quarter rose 5.7%, with U.S. comparable store sales up 6.6%. E-commerce comparable sales across the company increased 14.8%.
Ron Vachris, chief executive officer of Costco, said during the retailer’s investor conference call that the Kirkland Signature brand is “uniquely positioned” to provide members with great quality and great value.
With a continued focus on delivering value to shoppers, the company has lowered prices on a range of items, including butter, eggs, and several Kirkland Signature products. Gary Millerchip, executive vice president and chief financial officer, highlighted several price reductions of Kirkland Signature items, including organic extra virgin olive oil, from $24.99 to $18.39; chocolate macadamia clusters, from $17.99 to $14.69; and organic mixed nut butter, from $8.69 to $7.59.
“We are continuing to move more items to locally sourced production, which is allowing us to lower prices in those markets,” he said. “A notable example in the quarter was our Kirkland Signature Ultra Clean laundry products. These SKUs are now sourced in Asia for our APAC warehouses, allowing us to significantly lower transportation costs and reduce member prices in the region by approximately 40%.”
In the U.S., Millerchip said Costco is sourcing more American-made goods where available, including items such as mattresses, pillows, and plastic resin goods.
The third quarter also saw continued expansion of the Kirkland Signature assortment, with more than 40 new items, including mini muffin bites, smoked pork ribs, and apparel, hitting stores.
“New (Kirkland Signature) offerings are another way we are delivering more value to members,” he said. “These items typically offer members 15% to 20% more value compared to national brand alternatives, with equal or better quality.”
Managing Tariffs
Vachris said Costco is “remaining agile” as the situation with tariffs evolves. During the third quarter, the retailer rerouted many goods from countries with significant tariff exposure to its non-U.S. markets. In the U.S., the company pulled forward some items originally planned for summer and sourced additional locally produced goods to reduce tariff impacts and ensure product availability.
“Actions such as these are allowing us to continue to provide great values for our members while also delivering value to our shareholders,” he said.
Looking ahead, Vachris said that while the impact of tariffs and the broader economic outlook remain uncertain, he is confident in the company’s ability to navigate challenges and deliver consistent value to members.
“Our results in recent quarters have reinforced for us that in uncertain times, our values resonate with members as strongly as ever,” he said.
