Costco puts some of its growth in sales against an uncertain buying environment

Costco (Price) slightly beat estimates in its first-quarter results as consumers tired of falling prices turn to retailers.

Adjusted earnings per share came in at $4.04, compared to Bloomberg estimates of $3.81. Revenue of $62.15 billion also beat expectations of $61.98 billion.

“Our members are willing to spend money if inflation is going down” as long as there is “new product, quality, and value,” CFO Gary Millerchip said on his earnings call.

Same-store sales, excluding fuel, grew 7.2% in the quarter, boosted by its US business, followed by other countries and then Canada.

Passenger cars, up 5.1%, missed the 6.87% jump that Wall Street had expected, but ticket growth grew 0.1%, beating the 0.40% drop the Street had predicted.

Millerchip added that there is a “bifurcation” between consumers when it comes to buying food and buying expensive meats, while others buy more expensive products such as chicken, other cuts of beef and pork.

Costco shares are flat Thursday after the results. Year to date, its stock is up 50%, outpacing the S&P 500’s 27% gain (^GSPC).

That’s what Costco reported for its first fiscal quarter, which ended on December 4, 2024, according to Bloomberg consensus.

Fees: $62.15 billion versus $61.98 billion

Adjusted earnings per share: $4.04 versus $3.81

Industry comparison by size, including oil: 7.2% versus 6.26%

• US same-store growth: 7.2% vs. 6.14%

• Same-store growth in Canada: 6.7% versus 5.68%

• Other global growth: 7.1% versus 7.08%

Growth of E-commerce: 13.2% versus 14.1%

Membership fees: $1.17 billion versus $1.17 billion

Potential taxes under President-elect Donald Trump is catching the eye of the administration. It’s “difficult for anyone to predict” because of “uncertainty over the timing and extent of changes,” Millerchip said, calling tariffs “not something we see as positive.”

“We believe that our merchants and consumers are equipped … (to) operate and manage and manage this,” he said.

A number of options include directing purchases, working with vendors to reduce costs, considering alternative sources of supply, or reconsidering the products you can sell.

One-third of Costco’s business is non-food products that may be affected, although this “small portion” is exported.

On September 1, Costco raised the price of its Gold Star membership by $5 to $65 and the price of its senior membership by $10 to $130. This was a full quarter since the prices went up.

Story Continues