TLDR:
- Costco’s Q4 earnings per share beat estimates at $5.29
- Revenue slightly missed expectations at $79.7 billion
- Same-store sales grew 6.9%, exceeding forecasts
- E-commerce sales jumped 19.5%
- Membership fee income was $1.51 billion, below expectations
Costco Wholesale Corporation, the membership-only big-box retail giant, released its fiscal fourth-quarter results for 2024 on Thursday, September 26.
The company reported a mixed bag of results, with earnings surpassing analyst expectations while revenue fell slightly short.
For the quarter ending September 1, 2024, Costco posted earnings per share of $5.29, comfortably beating the Bloomberg consensus estimate of $5.07. This strong performance in earnings reflects the company’s ability to manage costs and maintain profitability in a challenging retail environment.
However, the company’s revenue for the quarter came in at $79.7 billion, just shy of the $79.96 billion analysts had predicted. Despite the minor miss, this figure still represents significant year-over-year growth for the retail giant.
One of the bright spots in Costco’s report was its same-store sales growth, which measures sales at locations open for more than a year.
The company reported a 6.9% increase in same-store sales, surpassing Wall Street’s expectations of a 6.4% rise. This strong performance indicates that Costco continues to attract and retain customers, even as inflation concerns persist in the broader economy.
Costco’s e-commerce division also showed robust growth, with sales jumping 19.5% compared to the same period last year. While this figure was slightly below the 19.63% growth analysts had anticipated, it still demonstrates Costco’s successful efforts to expand its online presence and adapt to changing consumer shopping habits.
The company’s membership model, a key driver of its business, showed mixed results. Membership fee income for the quarter came in at $1.51 billion, slightly below the $1.54 billion that Wall Street expected. However, Costco maintains strong customer loyalty, with U.S. and Canada renewal rates standing at an impressive 92.9%.
Costco’s CFO, Gary Millerchip, noted that as inflation has eased, the company has observed members spending more on non-food items. This trend is encouraging for Costco, as it suggests a potential shift in consumer behavior towards more discretionary spending.
The company’s focus on value continues to resonate with customers. Costco has been strategic in lowering prices on various items, including its private-label brand products. For example, a 13% price reduction on chicken tenders resulted in a 21% increase in sales volume.
Costco’s private label, Kirkland Signature, continues to grow in popularity among members. CEO Ron Vachris emphasized that this brand adds to the “value proposition” for members and helps build loyalty.
The company recently implemented a membership fee increase, the first since 2017. On September 1, 2024, Costco raised the price of its Gold Star membership by $5 to $65, and increased the Executive membership by $10 to $130. This change is expected to impact around 52 million memberships and potentially grow membership income by high-single to low-double digits in the coming quarters.
As of the end of Q4, Costco operates 891 warehouses worldwide, continuing its steady expansion. The company’s stock price has performed well year-to-date, up nearly 40% compared to the S&P 500’s 20% gain.
Despite the overall positive results, Costco’s stock experienced a slight dip in after-hours trading, falling 1.4%. This reaction may be attributed to the revenue miss and the high expectations set by the stock’s strong performance throughout the year.
