Costco Wholesale Corporation (NASDAQ:COST) has delivered another impressive quarter as consumers continue to seek budget-friendly prices on essential goods.
On Thursday afternoon, Costco announced net sales of $58.52 billion, surpassing estimates of $57.98 billion. Adjusted earnings per share came in at $3.78, beating the forecasted $3.70.
The company reported a 6.5% increase in same-store sales, excluding fuel. This growth was driven by its international business, which surged 8.5%, Canada with a 7.4% increase, and the US at 6%.
Costco also saw a rise in foot traffic year over year, outpacing competitors like Sam’s Club and BJ’s Wholesale Club (NYSE:BJ), according to Placer.ai. E-commerce was a standout, exceeding the expected 11.5% year-over-year increase with a 20.7% jump.
In the previous quarterly report, digital sales grew over 18% year over year, fueled by high demand for gold bars, silver, and appliances, according to former CFO Richard Galanti.
Membership fees, a critical revenue stream for Costco, aligned with estimates at $1.12 billion, marking a 7.6% increase from the previous year.
Costco’s membership options include a Gold Star membership at $60 per year and an Executive Membership at $120. Some analysts had predicted a fee increase this summer.
Year to date, Costco shares have risen by 25%, significantly outpacing the S&P 500 ,which gained 10%. The stock closed at an all-time high before reporting its fiscal Q3 results on Thursday.
Oppenheimer analyst Rupesh Parikh highlighted Costco’s strong global growth prospects, competitive edge, and proven ability to increase market share as justifications for a premium valuation. He also noted that management could further enhance shareholder value through alternative revenue streams.
JPMorgan analyst Christopher Horvers mentioned that Costco’s stock benefits from a higher income customer base and a long history of consistent market share gains.
Investors are keen to see the performance of non-food categories such as the jewelry department, which includes gold bars, alongside Costco’s traditional strengths in fresh food, particularly meat and produce.
This earnings report comes as consumers seek value in grocery shopping. In April, grocery prices increased by 1.1% compared to the previous year but dropped 0.2% compared to March, according to the US Bureau of Labor Statistics.
Costco’s Fiscal Q3 Earnings Highlights:
- Net Sales: $58.52 billion vs. $57.98 billion expected
- Adjusted EPS: $3.78 vs. $3.70 expected
- Total Comparable Sales (excluding fuel): 6.5% vs. 5.93% expected
- US Same-Store Sales Growth: 6% vs. 5.51% expected
- Canada Same-Store Sales Growth: 7.4% vs. 6.96% expected
- International Sales Growth: 8.5% vs. 7.46% expected
- E-commerce Growth: 20.7% vs. 11.5% expected
- Membership Fees: $1.12 billion vs. $1.12 billion expected
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