The Real Reason Costco's Sales Have Dropped For The First Time In A Decade

If there is one thing the pandemic might have taught us on the retail front, it's that we need warehouse stores like Costco in our lives. With shelter-in-place and social distancing, Costco's bulk buys allow us to keep our homes stocked with things we need, and lets us go for days — and in some cases, weeks — without having to venture out. 

But if Costco needed a reminder that it needs us too, the warehouse store got that last month. The lines that we saw crawling out the doors and around the areas outside the store weren't enough to keep Costco's sales up in April, and as a result, Costco reported that its comparable sales, which measures how much a company earns at its different retail venues (via Investopedia) fell by 0.5 percent. But if we consider other factors such as the impact of lower gas prices, Costco actually took a 4.7 percent hit in sales over the same four-week period that ended on May 3. This is the first time its monthly sales have fallen since July 2009, which is around the time of the last recession. (via The Wall Street Journal). 

Costco's April sales were hurt by social distancing

The April drop is easy to explain; sales were hurt by stay-at-home orders and social distancing restrictions. And remember all those times you wished Costco's food court and optical departments were open just like the way it was during the good old days? Store management probably felt that way too because all the closures or limited services across different departments, from travel booking to hearing aids and photos, all played a part in dragging April sales numbers down (via Costco). And the company would have seen it coming because its sales numbers in late March were already trending down because of social distancing.

Still, Costco is lucky. While most retailers have been shuttered since March and are only just starting to stir from the collective coronavirus-induced slumber, Costco still managed to report a sales total of almost $11.4 billion in April. Some of that came from e-commerce, which saw its sales numbers nearly double, or growing by an eye-watering 87.7 percent (via Costco).

With its recent decision to require members to wear face masks in store, and to bring back its normal operating hours, it may just be a matter of time before Costco's sales numbers correct themselves. One stock analyst seems to think that will be the case. "We continue to expect Costco to remain a share gainer, with its solid sales" and "high membership renewal rates," Joseph Feldman of Telsey Advisory Group said (via CNN).