Costco’s (COST) fiscal third-quarter earnings beat may not be enough to excite the stock this morning as shares dip into the red. The big-box retailer reported net sales of $58.52 billion ($57.98 billion expected) and adjusted earnings of $3.78 per share ($3.70 expected) on Thursday.
Yahoo Finance Retail Reporter Brooke DiPalma explains Costco’s 6% year-over-year gains in same-store sales and strengths in membership renewal and customers’ willingness to spend.
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Luke Carberry Mogan.
Video Transcript
Costco share is moving slightly lower this morning after its third quarter beat wasn’t enough to impress investors.
The company did see same store sales in the US rise.
6% shares are still up over 20% so far this year.
Yahoo Finance’s Brooke Dipalma joins us with the breakdown.
The good news is we’re selling out of some of that golf equipment, but that’s all I got for you.
Brooke.
It was a big hit.
Absolutely.
And other good news, the 150 hot dog is here to stay, but there was some high expectations for the company this past quarter, especially with new management stepping in both the new CEO that came in in January and a new CFO that came in and March.
But really a value conscious consumer flocked to Costco to score those deals on those bulk size items.
We saw the same source sales here in the US jump 6% and that was led by an increase in foot traffic some more frequent visits to the stores as well as an increase in the average transaction.
So customers spent a little bit more when they went there as well.
We also saw an increase in seam source sales in both Canada as well as their international business.
And two other takeaways from this report beyond the sea source sales jump was that membership fee income coming in line with expectations at $1.12 billion.
Now, that was a 7.6% increase compared to a year ago.
And we also saw for the first time here in the U and Canada, a 93% renewal rate.
So customers are returning, renewing their memberships as they once again seek that value.
Strong digital growth is also something to watch out for.
Especially with this new management, we saw a 20.7% increase in e commerce sales and that was fueled by gold, fueled by silver as well as appliances, gift cards and E tickets, Costco Logistics.
That’s a competitor to Best Buy that robust delivery uh service saw 28% growth that was fueled by one and appliances TV.
S even mattresses, Costco is delivering as well.
And now they’re really looking to ramp that up.
They have a partnership with Uber Eats that’s expected to serve Canada as well as 17 states in the US.
And this is something that Wall Street is very interested in.
We know that Costco is traditionally old school.
Now, this new management introducing some new ideas here as well.
I’m just sitting here smiling, I mean gold bars, golf clubs, a 48 pack of toilet paper like where else can you find all of that under one roof and hot dogs for a dollar 50?
Yeah.
And that’s why it’s such a hit.
Come on, you’ll like this too.
They’re testing this warehouse inventory.
So you’ll be able to see what’s in your local store, but it’s only in pilot right now.
All right.
Brooke, the Obama breaking down Costco’s Report here.
We’re gonna talk to Oliver Chen TD Cowan, senior research analyst.
He’ll weigh in on the results later this hour.
