Costco’s revenue for its holiday quarter fell short of Wall Street’s expectations, despite reporting year-over-year sales growth and robust gains in e-commerce. The retailer’s shares experienced a decline of about 4% in aftermarket trading, following earlier highs in the day.
Here’s a breakdown of Costco’s fiscal second-quarter performance compared to analyst expectations:
– Earnings per share: $3.92 vs. $3.62 expected
– Revenue: $58.44 billion vs. $59.16 billion expected
During the period ending February 18, Costco’s net income increased to $1.74 billion, or $3.92 per share, compared to $1.47 billion, or $3.30 per share, in the same period last year. Revenue saw a rise from $55.27 billion in the previous year’s quarter.
Comparable sales increased by 5.6% year-over-year, with a 4.3% increase in the U.S. Excluding gas prices and currency fluctuations, the metric increased by 5.8% and 4.8% in the U.S.
Sales of food and sundries, fresh foods, and nonfoods all showed positive growth, with a strong performance in ancillary businesses like the food court and pharmacy. More shoppers visited Costco, resulting in increased global traffic and higher average spending per trip.
Costco managed to maintain flat inflation year-over-year, allowing for price reductions on certain items. The retailer reduced prices on items like reading glasses and batteries due to falling freight and commodity costs.
In terms of expansion, Costco opened four new clubs during the quarter, including its sixth club in China. The company continues to invest in digital improvements, witnessing an 18.4% growth in e-commerce sales compared to the previous year.
Membership sign-ups have increased, partly due to Costco’s efforts to enforce membership policies, particularly regarding card sharing.
While a fee hike is anticipated, the company has not yet implemented one. CFO Richard Galanti, who is retiring, humorously deferred the task to his successor, Gary Millerchip.
Galanti emphasized Costco’s ongoing commitment to enhancing the digital shopping experience and maintaining fair membership practices, positioning the company for continued growth and success in the retail world.
