costco On Thursday, e-commerce sales soared, beating Wall Street’s quarterly profit and sales estimates as shoppers bought jewelry, bags and furniture.
On the members-only warehouse club’s earnings call, Chief Financial Officer Gary Millerchip said customers remain selective with their purchases. But he added that they are willing to spend more if they can find “a combination of newness, quality and value in the item,” especially as inflation is falling.
He said Costco’s strong sales of meat and produce show shoppers are eating out less and cooking more at home.
And the retailer said it was seeing “disagreements with members,” with some still spending money on “high-quality premium cuts,” while others were saying “categories such as poultry and cut meats… “Overall, they are attracted to products with a lower price per pound,” he added. Beef and pork too. ”
Here’s how Warehouse Club’s fiscal first-quarter results compare to Wall Street expectations, according to a survey of analysts by LSEG.
Earnings per share: $4.04 vs. $3.79 expected Revenue: $62.15 billion vs. $62.08 billion expected
Costco’s net income for the three months ended Nov. 24 rose to $1.8 billion, or $4.04 per share, from $1.59 billion, or $3.58 per share, a year earlier. Revenue increased from $57.8 billion in the same period last year.
Costco has benefited from its reputation for selling bulk items at lower prices as American households feel the cumulative effects of rising grocery and home prices. Members-only clubs have also raised their annual membership fees for the first time in about seven years. The quarterly results are Costco’s first since the fee increases went into effect in September.
Costco’s membership fee revenue came in at $1.17 billion, compared to the $1.16 billion Wall Street expected. Excluding the impact of exchange rates, sales increased by approximately 8% compared to the same period last year.
However, Mr. Millerchip said at the financial results conference that the impact of the fee increase is not yet significant because accounting is deferred. This was less than 1% of fee growth in the quarter, he said.
The company’s comparative sales increased by 5.2% year-on-year. Like-for-like sales in the United States increased by 5.2%.
Customers visited more Costco stores and websites during the quarter. Traffic grew 5.1% globally and 4.9% in the US The company’s average ticket increased 0.1% globally and 0.3% in the US, including gas deflation and negative exchange rate effects. Adjusting to exclude these, average ticket prices rose 2% globally and 2.3% in the US.
Gold and jewelry, gift cards, home furnishings, sporting goods, health and beauty products, and luggage kiosks and hardware all saw double-digit increases year over year, Millerchip said.
Sales in Costco’s fresh produce category, which includes produce, grew in the low single digits during the quarter, Millerchip said. He said meat sales increased by double digits as some members continued to purchase more expensive premium cuts while others purchased lower-priced options.
Costco’s Kirkland Signature private label brand is growing faster than the company’s overall business, Millerchip said. He added that Costco was able to lower prices on some items, including Kirkland’s organic peanut butter, chicken stock and Sauvignon Blanc.
He said the club’s food court, optical department and travel services such as car rentals and cruise reservations also performed well in the quarter, but gasoline sales fell by low double digits as the price per gallon fell.
E-commerce sales increased 13% in the quarter compared to the same period last year. Chief Executive Officer Ron Vacris said on an earnings call that the company is increasing its market share by shipping large and bulky items, with nearly 1 million deliveries in the quarter, a new record. He said he had achieved it.
Online traffic, conversions and average order value all increased year over year, Millerchip said.
Member renewal rates worldwide were 90.4%, down one-tenth of a percentage point, Millerchip said on the company’s conference call. He said renewal rates have declined slightly as the company is acquiring more new members through digital channels. He said those sign-ups tend to have slightly lower renewal rates.
The number of paying household members at the end of the quarter was 77.4 million, an increase of approximately 8% from the same period last year, or 138.8 million card members.
Costco also sold 4.2 million pies in the three days before Thanksgiving, and sold 274,000 whole pizzas in food courts across the country on Halloween, setting new records for the U.S. bakery category. he said on a conference call.
Costco opened seven new clubs in the quarter and plans to open 29 clubs during the fiscal year, including three relocations, Vakris said. Ten of the clubs are outside the United States. In total, the company has nearly 900 clubs, 617 of which are located in the United States and Puerto Rico.
As of Thursday’s close, Costco’s stock price was up nearly 50% since the beginning of the year, outpacing the S&P 500’s 27% rise over the same period. The stock closed Thursday at $988.39.
