Costco Wholesale Corporation Earnings Have Been Exceeding Analyst Predictions, And Membership Fees Have Reached $1.3 Billion

Costco Wholesale Corporation

Costco Wholesale Corporation’s revenues for the three months ending in August surpassed $72 billion, largely thanks to customers who were more concerned with savings than with the price of gasoline.

Thursday, Costco Wholesale Corporation (NASDAQ: COST) reported earnings for the fourth quarter that were better than analysts had anticipated. The company’s membership revenues topped $1.327 billion due to an influx of new customers with an emphasis on value-seeking relief from the fastest inflation in four decades.

Costco Wholesale Corporation said that its diluted earnings for the three months that ended on August 28, which was the company’s fiscal fourth quarter, increased by 11.7% from the previous year to $4.20 per share. This figure was around 4 cents higher than the consensus projection of Wall Street analysts.

According to Costco’s announcement, group net sales increased by 15.2% to $70.76 billion, while overall revenues increased by 15% to $72.091 billion, coming in just ahead of analysts’ projections of a total of $72.07 billion.

Pump costs dropped more than 20% from their record high of $5.10 a gallon in early June to the end of Costco’s fourth quarter, while core inflation softened from 1% in May to 0.1% in August. This may explain why revenues were only just modestly ahead of projections.

Costco Wholesale Corporation said its same-store sales increased by 13.7% globally and 15.8% in the United States, while its e-commerce sales increased by 7.1%. The revenue from memberships increased by 7.5% to a total of $1.327 billion for the quarter and reached $4.224 billion for the year.

While overall stocks were up 26% from the previous year, Costco Wholesale Corporation observed that there has been some minor improvement over “only the past few weeks.” Even the gross margins shrunk by approximately 80 basis points to 10.18%.

Following the publication of the quarterly earnings report, after-hours trading for Costco shares resulted in a loss of 2.6%, leading to an estimated $474.55 for each share on Friday.

Costco Wholesale Corporation Competitor Move

Earlier Thursday, major retail competitor Target Corp (TGT) announced that it plans to hire 100,000 employees to support its holiday sales effort. The company also plans to offer early seasonal discounts as it continues to monitor inventory levels following an unwanted build-up earlier this year. This plan contrasts with the only 40,000 seasonal additions planned at rival Walmart (WMT), which is also a significant competitor.

The holiday retail sales forecast published earlier this month by Deloitte indicates that holiday purchases will rise 4% and 6% from last year to around $1.46 trillion. This represents a significant slowdown from the 15% gains recorded during the same period in 2021.


Featured  Image: Megapixl ©  Prostockstudio

Please See Disclaimer


About the author: Valerie Ablang is a freelance writer with a background in scientific research and an interest in stock market analysis. She previously worked as an article writer for various industrial niches. Aside from being a writer, she is also a professional chemist, wife, and mother to her son. She loves to spend her free time watching movies and learning creative design.