Costco’s third-quarter earnings beat all key metrics, after shares closed at an all-time high

Costco (COST) posted another huge quarter as consumers look for wallet-friendly prices on everyday essentials.

On Thursday afternoon, the company reported net sales of $58.52 billion, compared to estimates of $57.98 billion. Its adjusted earnings of $3.78 also beat estimates of $3.70.

“We’re definitely winning in consumer items, where we see the food business and dining out a little bit has declined,” said CEO Ron Vacres, who He took on the role in JanuaryHe said in a call with investors.

Same-store sales, excluding fuel, jumped 6.5%, driven by growth in its International businesses (up 8.5%), Canada (up 7.4%), and the United States (up 6%).

This comes at a time when consumers are looking for value in grocery stores. In April, grocery prices jumped 1.1% from a year ago but fell 0.2% from March, according to the U.S. Bureau of Labor Statistics.

As inflation moderates, consumers are returning to discretionary items “led by toys, tires, lawn and garden, and health and beauty aids,” CFO Gary Millership said on the call.

This quarter, the wholesale retailer saw a year-over-year traffic increase, beating out the likes of Sam’s Club (WMT) and BJ’s Wholesale Club (BJ), according to Placer.ai.

Costco will not need to enact widespread price cuts like Target and Walmart to compete for customers, Vacris said.

“Buyers [for the company] “We are on top of prices daily and weekly, and we all review them every month, so we feel good about where we are today and our runway to remain competitive as we move forward.”

Costco has reduced prices on some items in its own brand, such as Kirkland Signature Pine Nuts and Kirkland Signature Frozen Shrimp Skewers.

E-commerce was another bright spot with a 20.7% jump, which Millership said was “led by gold and silver bullion, gift cards, and hardware.” New app downloads rose 32% to 35 million.

The company also expanded its partnership with Uber Grocery in the US and Canada.

Its logistics business saw deliveries increase by 28% year-on-year. This delivery company competes with Best Buy (BBY) and offers items like TVs, computers, appliances, tires, and even mattresses.

Costco is experimenting with offering warehouse inventory online, but Vakris said the company intends to maintain its in-store experience.

Membership fees, a major source of revenue, were in line with estimates of $1.12 billion, an increase of 7.6% compared to last year. A Costco Gold Star membership costs $60 annually, while an Executive membership costs $120. Some on the Street last year expected Costco to raise fees this summer.

The story continues

In the third quarter, the company had a total of 74.5 million paid members, with 34.5 million executive memberships.

When an analyst asked if they would increase fees, Millership said, “This is still the case when we increase fees, not if we increase fees.”

Offering advertising solutions could be an opportunity, given Costco’s access to member data. Walmart’s US media arm Walmart Connect saw sales grow 26% Latest quarterly results.

Costco shares are up 25% year to date, outpacing the S&P 500 (^GSPC)’s 10% gain, and closed at a record high before announcing its third-quarter financial results.

“We continue to believe a premium valuation is warranted, given Costco’s superior global unit growth prospects, its leading competitive position, and its track record of generating stock gains,” Oppenheimer analyst Rupesh Parikh wrote in a note to clients ahead of the report. Management can unlock more value for shareholders over time by directing alternative revenue sources.”

The company’s shares continue to benefit from a high-net-worth client base, along with a long history of consistent market share gains, JPMorgan analyst Christopher Horvers wrote.

Earnings Summary:

Here’s what Costco reported in its fiscal third-quarter earnings, compared to Wall Street estimates:

Net sales: $58.52 billion compared to $57.98 billion

Adjusted earnings per share: $3.78 vs $3.70

Total comparable company sales, excluding fuel: 6.5% vs. 5.93%

• US same-store sales growth: 6% vs. 5.51%

• Same-store sales growth in Canada: 7.4% vs. 6.96%

• Other countries: 8.5% versus 7.46%.

Growth of e-commerce: 20.7% vs. 11.5%

Membership fees: $1.12 billion versus $1.12 billion

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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke De Palma Or email her at [email protected].

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