Costco gold and silver sales 'seem to have grown considerably': Wells Fargo
Costco recently began selling gold bars at a time when the precious metal is trading at record highs
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Costco Wholesale got into precious metals sales last year with gold bars and, according to a Tuesday research note from Wells Fargo, those may have picked up quite a bit since then.
In the note, Wells Fargo equity analyst Edward Kelly wrote Costco’s sales of gold and silver "seem to have grown considerably" since then-CFO Richard Galanti announced in mid-December the retailer had "sold over $100 million of gold during the [first] quarter."
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Costco reporting it had made $100 million in gold sales came after Galanti had previously said the 1-ounce bars were going shockingly fast when uploaded on the retailer’s website.
Costco reportedly has made more than $100 million in gold sales since entering the precious metals market last year. (Costco / Fox News)
It launched its offering of gold bars in the fall. More recently, the wholesale retailer delved into silver, putting tubes of 1-ounce Canada Maple Leaf Silver Coins up for sale online, as FOX Business reported last month.
In this photo illustration, one-ounce silver Canadian Maple Leaf bullion coins are arranged in Katwijk, Netherlands, on March 14, 2021. (Yuriko Nakao/Getty Images / Getty Images)
The research note from Wells Fargo’s Kelly estimated sales of those precious metals "may now be running at $100-200m per month, which would add almost 1% to total comps, slightly more to US comps, and about 3% to gen. merch. sales."
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The gold and silver sales are likely "a very low profit business at best," due to Costco’s pricing strategy for the metals and shipping costs, according to the note.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| COST | COSTCO WHOLESALE CORP. | 928.08 | -2.07 | -0.22% |
Wells Fargo pointed to a few factors as indicators of the possible "sharp uptick in momentum" since the gold bars and silver coins debuted. They included the "accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST’s robust monthly eComm sales," according to the research note.
A general view of a Costco store in Teterboro, New Jersey, on June 28, 2023. (Kena Betancur/VIEWpress / Getty Images)
Second-quarter e-commerce sales "showed strength in several areas, led by sales of gold and very recently silver," the company said in early March. Costco saw an 18.4% year-over-year increase in its second-quarter comparable e-commerce sales.
Costco Wholesale
The retailer has said its e-commerce operation "provides a broader selection of merchandise that complements our warehouses." Generally, it has a roughly 4,000-item in-store selection.
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In the second quarter, the company generated $58.44 billion in total revenue. Its net income, meanwhile, came in at $1.74 billion.
Costco's footprint of warehouses includes 875 locations around the world.