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Costco’s March Sales Up by $1.5 Billion

By Daniel B. Kline – Updated Apr 9, 2020 at 8:54AM

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Digital growth was gigantic as well.

Costco (COST -1.20%) has seen its business spike due to the coronavirus pandemic. People need to eat. They need basic supplies and many other things that the warehouse club sells.

That has led to a dramatic increase in sales in March for the retailer. The company reported net sales of $15.49 billion for the month, an 11.7% increase from $13.87 billion in 2019.

A Costco parking lot.

Costco has seen its sales grow due to coronavirus. Image source: Costco.

Big growth for Costco

It's important to remember that sales are not the most important metric for Costco. The chain makes about two-thirds of its revenue from memberships and it's very likely that the coronavirus pandemic has led to an increase in the Costco memberships.

To retain members -- the warehouse club generally hovers around a 90% retention rate -- Costco needs its customers to feel like they're getting good value for their membership fee. That's likely something many people feel now, as they're getting much-needed supplies from the retailer.

The company also saw its e-commerce sales climb by nearly 50% in March. That's more members using a different aspect of their membership, which should only increase their loyalty to Costco.

It was going well anyway

Costco was growing its sales even before the coronavirus hit the United States. Its net sales through 31 weeks of 2020 rose by 9% to $96.25 billion from $88.29 billion in the same period last year. The warehouse club has seen its growth accelerate due to very special circumstances.

History has shown that once the warehouse club gets a member, it's likely to retain that member. That should be the case here, leaving the company as one of the few retailers that will emerge from the pandemic stronger than when it began.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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