Costco (COST) is set for another strong quarter, as consumers seek affordable prices for everyday essentials.
The wholesale retailer saw foot traffic increase year over year, beating out companies like Sam’s Club (WMT) and BJ’s Wholesale Club (BJ), according to Placer.ai. As of Thursday afternoon, the company is expected to report net revenue of $57.98 billion, up 8.07% year-over-year, and adjusted earnings of $3.70, up 8%.
Same-store sales are expected to jump 5.93% from last year, driven by growth in its international business, up 7.46%. Same-store sales are expected to increase 6.96% in Canada and 5.51% in the United States.
E-commerce is also expected to be a bright spot, with estimates of an 11.5% year-over-year increase.
In the previous quarterly reportdigital sales grew more than 18% year over year, fueled by demand for gold bars, silver and appliances, Costco Chief Financial Officer Richard Galanti said during of the call for results.
Membership dues, a key revenue source, are expected to total $1.53 billion, up from $1.51 billion a year ago.
A Costco Gold Star membership costs $60 per year, while an executive membership costs $120. Some on the street predicted last year that Costco would raise fees this summer.
Costco shares are up 22% year to date, outpacing the S&P 500 (^GSPC) a gain of around 11%.
“We continue to believe a premium valuation is warranted, given the superior growth prospects of Costco’s global units, its leading competitive position and its track record of stock gains,” wrote analyst Rupesh Parikh at Oppenheimer, in a note to clients, adding that “management can unlock even more shareholder value over time through the creation of alternative revenue streams.
Christopher Horvers, an analyst at JP Morgan, wrote that the company’s shares continue to benefit from a higher-income audience, as well as a long history of consistent market share gains.
Wall Street is eager to see how non-food categories like the jewelry department (including gold bars) perform, as well as traditional fresh food strength, led by meat and produce.
This comes as consumers look for value when it comes to groceries. In April, race prices jumped 1.1% compared to last year, but fell 0.2% from March, according to the U.S. Bureau of Labor Statistics.
Horvers also expects gas to bring a 70 basis point year-on-year increase relative to inflation and relative to the average selling price which is 5% higher than that of April 2023.
Summary of winnings:
Here’s what Wall Street expects from Costco for its third-quarter results, compared to a year ago:
Net sales: $57.98 billion, up from $53.65 billion
Adjusted EPS: $3.70, down from $3.43
Same-store sales growth: 5.93%, compared to 3.5%
U.S. same-store sales growth: 5.51%, up from 1.8%
Same-store sales growth in Canada: 6.96%, compared to 7.4%
Other international: 7.46%, compared to 8.4%
E-commerce Growth: 11.5%, compared to a drop of 9%
Membership fees: $1.53 billion, up from $1.51 billion
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.
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