Costco (COST) Surges on Bulk-Up Earnings for Fiscal 2024 Q1 Results
Costco reported stellar earnings for its fiscal 2024 first quarter, beating Wall Street expectations and delighting investors. For the quarter, the wholesale giant announced adjusted earnings per share of $3.58, surpassing the $3.41 anticipated by analysts. Revenue for the quarter reached $57.8 billion, up 6% year over year, compared to the $57.71 billion expected by Bloomberg data.
Despite the strong earnings, same-store sales, excluding gas and foreign exchange, fell short of expectations due to the retailer’s performance in the US. Total same-store sales grew by 3.8%, compared to the 4.3% anticipated. In the US, same-store sales growth came in at 2.0%, falling short of the 2.77% expected. However, in Canada, the retailer beat estimates with a 6.4% same-store sales growth, while international stores also reported a higher-than-expected increase of 11.2%.
Costco’s CFO, Richard Galanti, expressed delight in stronger-than-expected foot traffic, attributing the success to momentum gained during the pandemic. He remarked on a call with investors that the company has not only maintained increased volumes but also continued to add to those levels, making them feel very fortunate.
The wholesale giant also announced a special cash dividend of $15 per share, amounting to an aggregate payment of $6.7 billion. This marks the company’s fifth special dividend in 11 years and will be paid out on Jan. 12.
Costco’s shares are up 39% year to date, outperforming the S&P 500’s 23% gain. Analysts believe that the retailer’s private label Kirkland brand is instrumental to the company’s success.
On the earnings front, Galanti also shared details about the retailer’s e-commerce performance, including the sale of over $100 million worth of 1 oz. gold bars and other collectibles. The company’s app was downloaded 2.75 million times during the quarter, and now has 30.5 million users, a 10% increase year over year.
Meanwhile, Costco CEO Craig Jelinek is stepping down from his position effective Jan. 1, 2024, after which Ron Vachris will take over as CEO. The company also lost a longtime board member, Charlie Munger, who had served as a director since 1997.
As for the future, Wall Street speculates that a membership fee increase may be on the horizon. Costco last raised its membership fees in June 2017 and may be due for another increase given the strong renewal rates and loyalty shown by its members.
Costco’s stellar fiscal 2024 Q1 earnings reflect the resilience and adaptability the company has exhibited during the pandemic and signals a positive outlook for the future.