Costco has reported its quarterly earnings, which exceeded Wall Street expectations. The membership-based warehouse club saw increased traffic worldwide and in the US, with shoppers making more trips to its stores. However, they spent less on pricier items outside of food, leading to a drop in the average transaction amount. Despite this, Costco’s net income for the fiscal fourth quarter rose to $2.2 billion, or $4.86 per share, compared to $1.87 billion, or $4.20 per share, a year earlier. Comparable sales for the company rose 1.1% year over year but only 0.2% in the US. Excluding changes in gas prices, the metric rose 3.8% overall and 3.1% in the US.
Costco has gained momentum over the past few years as more Americans have cooked at home and sought larger pantry spaces during the pandemic. The company also benefited from inflation as shoppers signed up and renewed their memberships to clubs like Sam’s Club and BJ’s Wholesale Club. Costco ended the quarter with 71 million paid household members, up nearly 8% from a year ago, and more members opted for its pricier Executive Membership, which accounts for about 73% of its global sales.
Despite consumers pulling back on big-ticket items, groceries continue to drive sales for Costco. The company has also added smaller-ticket items and kept merchandise fresh by carrying popular gaming systems and early Christmas items. However, e-commerce sales declined 0.8% compared to the previous year as customers bought fewer high-value items online. Investors are anticipating a membership fee increase, which CFO Richard Galanti confirmed would happen but did not specify when. Costco also plans to open 10 new stores in the next three months.
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