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Costco Tops Earnings Forecast on Strong Shopper Demand
Higher Membership Fees and Expanding Digital Services Drive Growth for Retailer
Costco Wholesale Corp.’s quarterly profit rose more than expected, showing the club chain is capitalizing on an extended period of sales growth.Ìý
Earnings were $4.58 per share, excluding some items, during the fiscal quarter ended Feb. 15. That’s three cents higher than the average of estimates compiled by Bloomberg News. Membership fees totaled $1.36 billion during the quarter, beating expectations.
The shares fell less than 1% in extended trading in New York. The stock has advanced 14% so far this year, outperforming the S&P 500 Index, which was little changed over the same period.Ìý
Costco ranks No. 53 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 6 on the wholesale/retail sector list.
Costco has gained market share as its bulk sizes and unique selection of goods draw in shoppers looking for value, especially those with more disposable income. The retailer has also expanded its e-commerce and delivery services while adding shopping hours for its executive members.Ìý
The company’s global and U.S. membership renewal rates were slightly lower than a year ago and similar to the prior quarter, according to a filing. Gold, jewelry, toys and small electronics were among the top sellers for the period.Ìý
With more than 800 locations across the world, Costco has garnered popularity with an ever-changing assortment of products, including its popular Kirkland brand that offers everything from tequila to chocolate pies. Shoppers pay an annual membership fee and tend to be wealthier — which is the cohort that’s currently driving consumer spending in the U.S.Ìý
Costco has been trying to catch up on e-commerce, and digital sales are growing at a faster pace than overall sales. Costco’s e-commerce sales rose nearly 22% in the latest quarter, surpassing the average of estimates.Ìý
The retailer is teaming up with third-party delivery companies, including Instacart Inc., while expanding services like cake delivery and deli trays. This is helping it to attract younger shoppers, though they renew their membership at a lower rate than other groups.Ìý
