Costco (COST) earnings Q4 2023

Costco on Tuesday reported quarterly earnings that topped Wall Street’s expectations, as shoppers turned to the membership club for groceries but bought fewer big-ticket items.

On an earnings call, Chief Financial Officer Richard Galanti said shoppers made more trips to the retailer’s stores, even as they spent less. He said sales of pricier items in the U.S., outside of food, were weaker and falling gas prices also weighed on revenue.

Traffic rose 5.2% worldwide and 5% in the U.S. on a year-over-year basis. Costco’s average transaction amount in the quarter dropped nearly 4% worldwide and 4.5% in the U.S., he said.

Here’s what the membership-based warehouse club reported for the three-month period that ended Sept. 3 compared with what analyst were expecting, according to consensus estimates from LSEG, formerly known as Refinitiv:

  • Earnings per share: $4.86 vs. $4.79 expected
  • Revenue: $78.9 billion vs. $77.9 billion expected

Costco’s net income for the fiscal fourth quarter rose to $2.2 billion, or $4.86 per share, compared with $1.87 billion, or $4.20 per share, a year earlier.

Comparable sales for the company rose 1.1% year over year but only 0.2% in the U.S. Excluding changes in gas prices, the metric rose 3.8% overall and 3.1% in the U.S.

Costco has gained momentum in the past three years, as membership-based warehouse clubs benefited from dynamics such as more Americans cooking from home and more millennials moving into suburban homes with bigger pantries during the pandemic. Inflation has also driven some shoppers to sign up and renew their memberships to clubs, including Walmart-owned Sam’s Club and BJ’s Wholesale Club.

Those favorable membership trends continued in the quarter. Costco ended the period with 71 million paid household members, up nearly 8% from a year ago. That growth outpaced its rate of new store openings, which grew by slightly under 3%.

Costco has also gotten more of those members to spring for its pricier membership. The higher-tier, called Executive Membership, costs $120 on an annual basis compared to $60 for the typical annual membership, and includes some additional perks.

As of the end quarter, Costco had 32.3 million paid executive memberships, an increase of 981,000 since the end of the prior quarter. Those higher-tier members now account for slightly over 45% of all paid membership, Galanti said. They also account for about 73% of its global sales, he said.

In recent quarters, even Costco has spoken about consumers pulling back on some big-ticket and discretionary items, as grocery bills and housing costs remain elevated.

That trend has weighed in particular on Costco’s digital sales. E-commerce sales declined 0.8% compared with the year-ago period. On the earnings call, Galanti said customers are buying less of the items that tend to make up a bigger part of the company’s online sales, such as furniture, small electronics and jewelry.

But some discretionary items have popped on the company’s website, Galanti said. Sales…

Read More: Costco (COST) earnings Q4 2023

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