Costco beat Wall Street’s quarterly earnings and sales estimates, on Thursday as its bulk and discounted offerings, as American shoppers went on a spree. This early holiday-season sales growth was seen for the membership-only retailer. Costco know for selling products in larger packs had bulk offers on items has seen picky consumers turn to its stores to shop for their holiday needs, this included home furnishings and jewelry.
On the earnings call, Chief Financial Officer Gary Millerchip for Costco said customers have remained selective with purchases. But, he added, they have shown they’re willing to spend, especially as inflation comes down, if they see a “combination of newness of items, quality and value.”
Costco discounts and bulk rose profit
Gary Millerchip believes that Costco’s strong sales of meat and produce indicates that shoppers are dining out less and cooking more at home.
He also feels the retailer has seen a “bifurcation with the member,” with some who are still spending on “high-quality premium cuts” and others with “a gravitation towards those lower price per pound items across categories like poultry and cuts of beef and pork as well.”
Costco quarterly earnings results
Let’s look at how Costco did for the Q1 compared to what Wall Street expected, this is as per a survey of analysts by LSEG:
Costco’s earnings per share: $4.04 vs. $3.79 expected
Costco’s revenue: $62.15 billion vs. $62.08 billion expected
In the three-month period that ended on November 24, Costco’s net income rose to $1.80 billion, or $4.04 per share, from $1.59 billion, or $3.58 per share in the year-ago period. Costco’s e revenue grew from $57.80 billion from 2023.
Costco benefitted from membership-based club
Costco has benefited from its reputation for selling bulk items at better value, as U.S. households feel the cumulative effect of higher food and housing prices. The membership-based club also hiked its annual membership fee for the first time in about seven years. The quarterly results are the first Costco has reported since that fee increase took effect in September.
Costco’s membership fee revenue came in at $1.17 billion, compared to the $1.16 billion Wall Street had expected. It jumped by almost 8% year over year, excluding the impact of foreign exchange rates.
Costco’s strong sales
The comparable sales for Costco increased 5.2% year over year.
E-commerce sales of Costco rose 13% in the quarter compared with the year-ago period. The company is gaining market share by shipping big and bulky items, CEO Ron Vachris said on the company’s earnings call, and it hit nearly 1 million deliveries in the quarter, which was a new record.
Costco also hit new records in its U.S. bakery division by selling 4.2 million pies in the three days prior to Thanksgiving and selling 274,000 whole pizzas in its food courts across the country on Halloween, Vachris said on the call.
Costco stock performance
Costco share price as of Thursday at closing was up nearly 50% so far this year. It surpassed the 27% gains of the S&P 500 during the same period. Costco stock closed at $988.39 on Thursday.
