Costco Tops Profit Expectations with $50.3 Billion in Total Revenue — What It Means for Stockholders

Costco Wholesale Location. Costco Wholesale is a Multi-Billion Dollar Global Retailer stock photo
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Costco Wholesale delivered another stellar financial performance update on Dec. 9, as the bulk discount retailer breezed past fiscal first-quarter earnings and revenue expectations despite a tough operating environment.

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Wall Street applauded the news, pushing Costco’s stock higher in early trading Friday after executives voiced confidence in the chain’s ability to manage inventory, inflation and supply-chain challenges moving forward.

Total revenue for the quarter, including membership fees, rose 16.5% from the prior year to $50.3 billion, Costco said in a press release. Earnings gained 14% to $2.98 a share even as the company had to contend with higher costs and narrower margins due to inflation. Both results easily beat consensus analyst estimates, The Street reported.

Same-store sales for the quarter grew 9.9% in the United States, 8.3% in Canada, 10.9% in other international markets and 13.3% in e-commerce. Membership fee income rose about 10% year-over-year.

Related: Here’s When You Should Skip Costco and Shop at the Dollar Store

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For shareholders, the results offered reassurance that Costco has a solid game plan for weathering the current economic headwinds. Despite ongoing inflationary pressures, Costco has worked to limit passing on its own cost increases to members, CNBC reported.

Even though the company’s gross margins fell by 49 basis points year-over-year — mainly due to gasoline inflation — Chief Financial Officer Richard Galanti said on an earnings call with analysts that he thought the margin results were “pretty good.” He offered a similar assessment of Costco’s current inventory position and its strategy to mitigate cost and price increases.

As CNBC noted, investors should be heartened by a couple of things. One is Costco’s expansion plans, which can be taken as a sign that it feels bullish about the future. The company had eight net store openings during the first quarter and plans to open a net 19 new stores during the remainder of the fiscal year.

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Another good sign is that Costco might offer a special cash dividend to shareholders — something it has done four times in the past eight years, most recently in November 2020.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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