Costco revenue beats estimates as cash-strapped consumers look for deals on groceries, discretionary items
Costco's quarterly earnings beat Wall Street's revenue expectations on strength in groceries and discretionary items
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Costco Wholesale beat third-quarter revenue expectations on Thursday, as cash-strapped consumers flocked to its warehouses to grab low-priced groceries and discretionary items.
The membership-only retailer saw resilient demand for its groceries and bakery items as consumers grappling with still-high cost of living preferred cooking more meals at home.
With consumers trading down to shop for low-priced goods across product categories, the company also saw steady demand for its low-priced discretionary items.
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Costco's net sales grew 9.1% in the quarter while e-commerce sales surged by 20.7%. Membership income grew 7.6%, and Costco members worldwide renewed at a 90.5% rate. (iStock / iStock)
Earlier this month, retail bellwether Walmart beat quarterly estimates and forecast positive annual targets, supported by steady demand for cheaper groceries and expectations of a rebound in demand for non-essentials.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| COST | COSTCO WHOLESALE CORP. | 971.88 | +10.33 | +1.07% |
Another larger peer Target, however, reported a dour quarter on tepid consumer spending.
Costco total revenue of $58.52 billion for the quarter ended May 12, compared with analysts' average estimate of $58.07 billion, according to LSEG data.
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New Costco CFO Gary Millerchip said that Costco's $1.50 hot dog deal at the store's food court will remain despite speculation that it he would eliminate it. (Stephanie Keith/Bloomberg via Getty Images / Getty Images)
The company also posted a profit of $3.78 per share, above estimates of $3.70.
"Consumers have become increasingly value-driven in the past two years and it seems like that trend won't be waning anytime soon. If that's the case, Costco should benefit for years to come," said Blake Droesch, analyst at eMarketer.
In the first quarter, visits to Costco Wholesale were up 8.9% on a year-over-year basis, while visits to Walmart and Target were up 3.9% and 3.5% respectively, as per Placer.ai data.
Costco's top sales categories in the latest quarter were appliances, gold and silver bullion, as well as gift cards and e-tickets. (Photo by Joe Raedle/Getty Images / Getty Images)
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The company's total comparable sales rose 6.5% on an adjusted basis in the quarter, compared to a 3.5% rise last year.
Costco's ecommerce comparable sales rose 20.7% in the current quarter after dropping 10% last year.