Costco’s Australian business is fast becoming a force to reckon with as the US supermarket chain’s sales haul for 2021 hit nearly $3 billion putting it ahead of local retail giants such as Myer, Target and Premier Investments.
The membership-only chain recorded a 9.6 per cent jump in sales to $2.84 billion over the 12 months to August 31 as Australians bought up grocery goods in bulk, according to accounts filed with the corporate watchdog in late December.
Shoppers stock up at Costco in the Melbourne Docklands before a five-day lockdown. Credit: Jason South
The bump in sales flowed through to Costco’s bottom line with its net profit after tax more than doubling to $46.40 million from $22.22 million a year prior. Costco’s strong results came from a relatively small network of 13 stores across the country.
By comparison, Myer recorded $2.7 billion in sales across its 59 department stores during 2021. Sales at Target, which is drastically downsizing its store network closing or converting 144 outlets in recent years, were about $2.6 billion in 2021 and Premier Investments – which owns a suite of brands including Peter Alexander, Smiggle, Just Jeans and Dotti – notched up sales of $1.4 billion across its network of stores. IKEA’s 10-store network in Australia recorded sales of $1.6 billion during 2021.
Costco’s sales figures for 2021 are still well shy of its supermarket rivals powerhouses Woolworths, with $67.3 billion in sales and Coles, which recorded $38.6 billion in retail sales during 2021 and Aldi which most recent figures for 2020 put its sales at more than $12 billion.
Costco’s sales are also below Kmart which rang $6.8 billion through its tills in 2021.
The US supermarket group is known for its warehouse format and steep discounts on groceries, clothing and other merchandise that are sold in bulk. The retailer is a membership-only business, meaning shoppers need to be registered members to shop at the store.
From a quiet start in Australia in 2009, Costco has become increasingly popular with shoppers particularly as consumers stocked up ahead of rolling lockdowns. Costco remained open during lockdowns because its stores sell groceries, unlike many other retailers that were forced to close their doors due to state-government restrictions.
“During the pandemic, the company provided an essential service to the community while prioritising the safety of our employees and members,” Costco’s Australian chairman, Patrick Noone, said.
Increasing Costco’s Australian presence over the year also helped drive up results, Mr Noone said. “The change in profit and loss from ordinary activities before tax is primarily due to an increase in revenue from the additional warehouse and e-commerce business,” he said.
Costco is not the only foreign retailer to have a bumper 2021. Uniqlo and IKEA’s local businesses also had a strong year as Australians took to comfortable clothing and kitting out their home office. Japan’s Uniqlo posted an 11.7 per cent increase in sales over the 12 months to August 31, while the Swedish furniture group posted a 4.5 per cent jump in sales.
The results from the overseas headquartered retailers came ahead of the rebound in consumer spending as lockdowns were lifted in NSW and Victoria. October retail trade figures, published by the Australian Bureau of Statistics in the week before Christmas, show turnover had increased 4.9 per cent on a seasonally adjusted basis.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.