Costco (COST) slightly beat estimates in its fiscal first quarter results as inflation-weary shoppers turn to the wholesale retailer.
Adjusted earnings per share came in at $4.04, compared to Bloomberg consensus estimates of $3.81. Revenue of $62.15 billion also beat expectations of $61.98 billion.
“Our members are willing to spend as inflation comes down” as long as there’s “newness of items, quality, and value,” CFO Gary Millerchip said on its earnings call.
Same-store sales, excluding fuel, grew 7.2% in the quarter, boosted by its US business, followed by international and then Canada.
Foot traffic, up 5.1%, missed the 6.87% jump Wall Street hoped for, but ticket size grew 0.1%, besting the 0.40% decline the Street predicted.
Millerchip added there’s a “bifurcation” among consumers when it comes to food shopping with some buying higher-priced meats, while others going for lower priced items like poultry, some cuts of beef and pork.
Costco shares are flat Thursday after the results. Year to date, its stock is up over 50%, outpacing the 27% gain for the S&P 500 (^GSPC).
Here’s what Costco reported for its fiscal first quarter, which ended Dec. 4, 2024, compared to Bloomberg consensus estimates.
Revenue: $62.15 billion versus $61.98 billion
Adjusted earnings per share: $4.04 versus $3.81
Total company comparable sales growth, excluding fuel: 7.2% versus 6.26%
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US same-store sales growth: 7.2% versus 6.14%
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Canada same-store sales growth: 6.7 % versus 5.68%
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Other international sales growth: 7.1% versus 7.08%
E-commerce growth: 13.2% versus 14.1%
Membership fee revenue: $1.17 billion versus $1.17 billion
Potential tariffs under President-elect Donald Trump are catching the eyes of management. It’s “difficult for anyone to predict” due to “uncertainty around the timing and scope of changes,” said Millerchip, calling tariffs “not something that we see as a positive in general.”
“We believe that our merchants and buyers are equipped … [to] work through and navigate and manage that situation,” he said.
A few options include pulling forward inventory buying, working with vendors to mitigate costs, considering alternative sourcing locations, or reconsidering which items to sell.
A quarter of Costco’s business is non-food items that will be affected, though only a “subset” of that category is imported.
On Sept. 1, Costco hiked the price of its Gold Star membership by $5 to $65 and the price of its Executive membership by $10 to $130. This was the first full quarter since the price hike.
