Why soaring oil prices is a huge opportunity for Costco, Walmart and BJ

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According to AAA data, the national average gasoline price jumped to $3.41 per gallon on Friday, 61% higher than the average price in the same period last year. The Biden administration has called for investigations into whether oil and gas companies have illegally pushed up prices.

Companies, retail analysts and fuel experts say the surge has prompted more shoppers to rely on these chains to fill up their gas tanks. The gasoline price of the warehouse club is 30 cents lower than that of the traditional gas station, and the chain store will provide member coupons for members to use in the store when refueling. Gasoline sales at the warehouse club are an important part of their business and can attract customers.

Michael Baker, a retail analyst at DA Davidson, said: “People are looking for clubs because of gasoline.” “The nature of American consumers is to do their best to lower gasoline prices.”

For example, according to Tom Kloza, head of global energy analysis for IHS Markit’s oil price information service, Costco prices are usually 20 cents per gallon lower than the market average. BJ’s said it was 10 cents lower than average.

Kloza said these companies are “winners when gasoline prices soar.”

Costco (cost), Sam’s Club and BJ’s (Beijing) I hope you fill up the gas tank in their parking lot, and then stock up on big cans of ketchup, snack boxes and clothes. (Why not just buy a flat-screen TV or a new sofa?) Their gas station provides these warehouse-style stores with an advantage that many retail competitors cannot match.
Natural gas accounts for about 10% of Costco’s total sales, or US$20 billion per year, and 9% of BJ’s total sales. Walmart (Garbage classification)The owner of Sam’s Club did not disclose which part of its sales came from natural gas.

Kloza said that natural gas is a well-known low-margin business, but retailers can make money by selling large amounts of natural gas—even if the charges are much lower than independent gas stations. Kloza added that Costco’s sales reached 1 million gallons per month, while A typical gas station consumes an average of 80,000 gallons per month.

Despite the large brands, the vast majority of ExxonMobil, Chevron, BP and Shell natural gas stations are independently owned, so they cannot be produced in large quantities like wholesalers. Although wholesalers can profit from natural gas, they don’t make much: Costco reports, for example, that gasoline has a lower profit margin than its other businesses. Rising gasoline prices usually help Costco’s sales, but it hurts its profits.

Richard Galanti, Costco’s chief financial officer, said: “When there is inflationary pressure and prices rise, people want to save gasoline.” He said that for every 100 people who come to Costco to refuel, more than half of them will go to the store. Shopping.

In the most recent quarter ended October 30, BJ’s Wholesale Club’s natural gas sales increased by 20% compared to the same period last year.

Chief Executive Robert Eddy said in a conference call with analysts on Thursday that BJ’s gasoline market share is “expanding”. When the price of gasoline exceeds $3 per gallon, “members love us” and transfer their gasoline expenditures to the club.

Gas discounts are a tool Walmart uses to encourage customers to sign up for Walmart+ membership, which also offers free shipping and discounts on prescriptions.

Wal-Mart said on Tuesday that it is actively working to lower gasoline prices to attract customers who are worried about how much they will pay at gas stations, especially as the benefits of federal stimulus measures weaken.

“Gas prices are worrying… they have risen sharply compared to a year ago,” Wal-Mart CEO Doug Macmillan said on the earnings call. “Customers have money [then]. At some point, this will end. ”



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