Skip to main content

Costco Earning Beat Street Forecasts, Membership Fees Top $1.3 Billion

Value-focused shoppers helped offset a slide in gas prices, boosting Costco sales past $72 billion over the three months ending in August.

Updated at 5:30 pm EST

Costco Wholesale  (COST)  posted better-than-expected fourth quarter earnings Thursday, with membership revenues topping $1.327 billion as new value-focused customers piled in to find relief from the fastest inflation in four decades. 

Costco said diluted earnings for the three months ending on August 28, the company's fiscal fourth quarter, rose 11.7% from last year to $4.20 per share, around 4 cents ahead of the Street consensus forecast.

Group net sales, Costco said, rose 15.2% to $70.76 billion, while total revenues were up 15% to $72.091 billion, just ahead of analysts' forecasts of a $72.07 billion tally. 

Sliding gas prices may explain why revenues were only modestly ahead of forecasts, as pump costs fell more than 20% from their record high of $5.10 per gallon in early June to the end of Costco's fourth quarter, while core inflation eased from 1% in May to 0.1% in August.

Same store sales were up 13.7% globally and 15.8% in the United States, Costco said, with e-commerce sales rising 7.1%. Membership revenues were up 7.5% to $1.327 billion for the quarter and $4.224 billion for the year. 

Still, gross margins narrowed by around 80 basis points to 10.18%, Costco noted, while overall inventories were up 26% from last year, with some modest improvement over "just the past few weeks".

Costco shares were marked 2.6% lower in after-hours trading following the earnings release to indicate a Friday opening bell price o $474.55 each.

Earlier Thursday, big retail rival Target Corp  (TGT)  unveiled plans to hire 100,000 employees to support its holiday sales effort, adding it plans to offer early seasonal discounts as it continues to monitor inventory levels following an unwanted build-up earlier this year, a plan that contrast with only 40,000 seasonal additions planned at rival Walmart  (WMT) .

Deloitte's holiday retail sales forecast, published earlier this month, indicates overall holiday purchases will rise between 4% and 6% from last year to around $1.46 trillion, a marked slowdown from the 15% gains recorded over the same period in 2021.