Will more membership-fee revenue be a catalyst for the stock?Costco (COST 0.83%) recently reported strong fiscal third-quarter results and talked about a potential membership-fee increase down the road. The stock has been a strong performer, up over 60% in the past year.Let's take a closer look at the retailer's most recent earnings, the potential impact of a membership-fee increase, and whether now is a good time to buy the stock.Rising sales and potential membership-fee increasesCostco's stellar fiscal Q3 ...

Financial Performance - Net sales increased by 9% to $57,392 million in the third quarter of 2024, driven by comparable sales growth and sales from 24 new warehouses opened since the end of the third quarter of 2023[94] - Net income for the third quarter was $1,681 million, or $3.78 per diluted share, compared to $1,302 million, or $2.93 per diluted share in 2023[94] - Comparable sales increased by 7% in the third quarter of 2024, positively impacted by increased shopping frequency and a slightly higher average ticket[99] - Sales in core merchandise categories increased by $3,892 million or 9% during the third quarter of 2024, with growth across all categories[97] - The e-commerce business experienced a 21% increase in comparable sales, despite a 10% decline in the previous year[96] Membership and Revenue - Membership fee revenue rose by 8% to $1,123 million, attributed to new member sign-ups and upgrades to Executive Membership[94] - Membership fee revenue increased by 8% in both the third quarter and the first thirty-six weeks of 2024, driven by new member sign-ups and upgrades to Executive Membership[100] - Total paid members reached 74,500, up from 69,100 in the previous year, while total cardholders increased to 133,900 from 124,700[100] Cost and Margin - Gross margin percentage increased by 52 basis points, primarily due to the absence of a $298 million charge recorded in the third quarter of 2023 related to the discontinuation of charter shipping activities[94] - Gross margin percentage for the third quarter was 10.84%, an increase of 52 basis points compared to the previous year, with a core merchandise gross margin percentage increase of 10 basis points[102][103] - SG&A expenses as a percentage of net sales decreased by 15 basis points, largely due to improved productivity in warehouse operations[94] - SG&A expenses as a percentage of net sales decreased to 8.96% in the third quarter, down 15 basis points from the previous year[108][109] Cash Flow and Capital Expenditures - Net cash provided by operating activities totaled $8,381 for the first thirty-six weeks of 2024, compared to $7,343 in the same period of 2023[115][117] - Capital expenditures for the first thirty-six weeks of 2024 amounted to $3,133, with plans to spend approximately $4,300 to $4,500 during fiscal 2024[119] Dividends and Share Repurchase - A quarterly cash dividend of $1.16 per share was declared on April 10, 2024, and a special dividend of $15.00 per share was paid on May 10, 2024, totaling approximately $6,655[122] - The Board of Directors authorized a share repurchase program of $4,000, expiring in January 2027, with $3,079 remaining available for purchase as of the end of Q3 2024[123] - In the first thirty-six weeks of 2024, the company repurchased 749,000 shares at an average price of $646.07, totaling approximately $484 million, compared to 908,000 shares at an average price of $492.30, totaling approximately $447 million in the same period of 2023[123] Warehouse Expansion - The company opened 24 new warehouses since the end of the third quarter of 2023, contributing to net sales growth[97] - The company opened 16 new warehouses in the first thirty-six weeks of 2024 and plans to open an additional 14 warehouses in the remainder of the fiscal year[119] Financial Position and Risks - The company maintains bank credit facilities with a borrowing capacity of $1,145 million, of which $656 million is for international operations[124] - Outstanding commitments under letter of credit facilities totaled $187 million at the end of Q3 2024, primarily consisting of standby letters of credit[125] - There have been no material changes to critical accounting estimates as disclosed in the Annual Report for the fiscal year ended September 3, 2023[126] - The company has not experienced any material changes in market risks related to foreign-currency exchange rates and interest rates since the last annual report[127] Internal Controls and Procedures - Disclosure controls and procedures were reviewed and deemed effective as of May 12, 2024, by the CEO and CFO[129] - No changes in internal control over financial reporting occurred during Q3 2024 that materially affected the company's internal controls[130]

ISSAQUAH, Wash., June 05, 2024 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today reported net sales of $19.64 billion for the retail month of May, the four weeks ended June 2, 2024, an increase of 8.1 percent from $18.16 billion last year. Net sales for the first 39 weeks were $186.07 billion, an increase of 6.9 percent from $174.07 billion last year. Comparable sales were as follows:  4 Weeks 39 Weeks U.S.5.8% 4.3% Canada6.7% 7.6% Other International9.3% 9.1% ...

The simplest way to explain interest rates is that it’s the cost of money. When policymakers cut interest rates, the objective is to lower the cost of money. This translates into higher consumption and investment spending in the economy and GDP growth accelerates. Specific to the United States, consumption spending is one of the key GDP growth drivers. Within that, retail sales are an important catalyst.In this article we will look at some of the best retail stocks to buy. U.S. GDP decelerated in Q1 2024 an ...

Costco is hovering around an all-time high and continues to put up solid results.Costco Wholesale (COST 1.47%) has been a market-outperforming retailer in a growth-driven market. Technology is the only sector that has outperformed the S&P 500 over the last five years. But Costco has done even better, with the stock up 238% in the last five years compared to a 193% gain in the tech sector and a 92% gain in the S&P 500.Costco's strong performance is based on solid fundamentals and investor optimism. Costco re ...

As we near the end of the second quarter, many great stocks are trading at discounted prices and cheap valuations. The market choppiness at the end of May has helped bring down the prices of several leading stocks. So, too, have corporate earnings. Missing Wall Street’s profit and sales targets has led to selloffs in many top stocks, opening up buying opportunities.Investors, particularly those with long time horizons, should pounce and buy some great stocks while they’re on sale. Given their pedigree and p ...

Discretionary items are back on consumers’ shopping lists, Costco said Thursday (May 30) during its quarterly earnings report.During the quarter ended May 12, the retailer saw toys, tires, lawn and garden, and health and beauty aids lead growth in the non-foods category.“As inflation has leveled off, our members are returning to purchasing more discretionary items,” Gary Millerchip, executive vice president and chief financial officer at Costco, said during the company’s quarterly earnings call.As was the c ...

Financial Data and Key Metrics - Net income for Q3 2024 was $1.68 billion, up from $1.3 billion in Q3 2023, with diluted EPS increasing to $3.78 from $2.93 [11] - Net sales increased by 9.1% to $57.39 billion compared to $52.6 billion in the same quarter last year [11] - Comparable sales growth was 6.6% (6.5% adjusted for gas inflation and FX), with U.S. comps at 6.2%, Canada at 7.7%, and other international markets at 7.7% [12] - E-commerce comp sales grew by 20.7%, both reported and adjusted for FX [12] - Membership fee income increased by 7.6% to $1,123 million, with renewal rates at 93% in the U.S. and Canada and 90.5% worldwide [12] - Gross margin rate improved by 52 basis points to 10.84%, driven by core margin improvements and lower gas inflation impact [13] Business Line Performance - Non-foods category showed the highest comp growth, driven by strong performance in toys, tires, lawn and garden, and health and beauty aids [18] - Bakery sales gained momentum with new product introductions like the Kirkland Signature Lemon Blueberry loaf and Morning Buns [18] - Food court sales were strong, particularly due to the success of the new chocolate chip cookie [19] - E-commerce growth was led by gold and silver bullion, gift cards, and appliances, with Costco Logistics deliveries up 28% [22] Market Performance - U.S. comp sales grew by 6.2%, while Canada and other international markets grew by 7.7% and 7.7% respectively [12] - Traffic increased by 6.1% worldwide and 5.5% in the U.S., with average transaction size up 0.5% globally and 0.7% in the U.S. [12] - Gasoline price inflation positively impacted sales by approximately 30 basis points, while foreign exchange had a negative impact of 20 basis points [12] Company Strategy and Industry Competition - The company continues to focus on delivering value to members through price reductions and high-quality Kirkland Signature products [19][20] - Expansion plans include opening 30 new warehouses in fiscal 2024, with a focus on the U.S., Japan, and Korea [17] - The company is enhancing its digital capabilities, with app downloads up 32% and site traffic increasing by 16% [22] - A new partnership with Uber Eats has been expanded to Canada and 17 U.S. states, with plans for further international expansion [23] Management Commentary on Operating Environment and Future Outlook - Management highlighted the importance of delivering value to members, especially as inflation has leveled off and consumers are returning to discretionary spending [18][19] - The company remains confident in its ability to maintain competitive pricing and drive member engagement through its value-focused strategy [19][20] - Management expressed optimism about the growth opportunities in both domestic and international markets, particularly in e-commerce and digital initiatives [22][23] Other Important Information - The company ended Q3 with 74.5 million paid household members, up 7.8% year-over-year, and 133.9 million cardholders, up 7.4% [12] - Executive memberships now represent over 46% of paid members and 73.1% of worldwide sales [13] - Capital expenditures for Q3 were approximately $1.06 billion, with full-year 2024 estimates between $4.3 billion and $4.5 billion [18] Q&A Session Summary Question: Membership Fee Increase - Management reiterated that membership fee increases are typically considered every five years, and while the company is beyond that cycle, no immediate changes are planned [26][27] - The company is focused on delivering value to members and ensuring that any fee increase would be justified by the value provided [26][27] Question: U.S. Expansion and Warehouse Growth - The company sees significant runway for new warehouse openings in the U.S., with a target of 25-30 new warehouses annually, half of which are expected to be in the U.S. [29][30] - Infill warehouses are strategically placed to reduce cannibalization and improve member shopping frequency [30][69] Question: Price Investments and Competitive Environment - The company does not plan to make significant price investments, as its everyday low-price strategy is already highly competitive [32] - Management is confident in its ability to maintain market share and drive member loyalty through value and quality [89][90] Question: Digital and E-commerce Strategy - The company is focused on improving its digital capabilities, including app functionality, site reliability, and personalized member experiences [40][41] - Costco Logistics is playing a key role in enhancing the e-commerce experience, particularly for large-ticket items like appliances [22][90] Question: Gross Margin and SG&A - The company maintains a gross margin cap of 14-15%, with no plans to change this threshold [37] - SG&A improved by 15 basis points in Q3, driven by higher labor productivity and cost discipline [15][73] Question: Gas Profitability and Traffic - Gas profitability was slightly lower in Q3, but overall traffic increased by 6.1%, with gas gallons up 5% [75][77] - The company sees gas as a key driver of member traffic and engagement [75][77] Question: Vertical Sourcing and Supply Chain - The company continues to explore vertical sourcing opportunities, particularly in areas like meat and optical products, but will only pursue these when necessary to ensure supply and value [63][64] Question: Retail Media and Personalization - The company sees significant opportunities in retail media and personalization, leveraging its unique member data to drive engagement and value [48][49] - IT spending will increase to support these initiatives, but it will remain within the normal course of business [52] Question: Discretionary Spending and Member Behavior - The company is seeing a return to discretionary spending, particularly in categories like home goods, toys, and sporting goods [43][61] - Management believes the company is gaining market share in these categories, driven by its value proposition [96][97] Question: Costco Next and Marketplace Model - Costco Next is seen as a significant growth opportunity, allowing the company to expand its product offerings and provide additional value to members [110][111] - The marketplace is curated to ensure that products align with the company's value-focused strategy [111][122]

Thursday, May 30th, 2024The second half of May has proven confusing for the markets. After major indices were more or less on a similar trajectory off April’s pullback, we saw the Nasdaq keep climbing higher — largely on the perceptions of the A.I. market following NVIDIA’s (NVDA) earnings report a week ago, while the small-cap Russell 2000 started to wane and the blue-chip Dow flatlined before sinking this week.The S&P 500 has been similarly range-bound over these past couple weeks, as well. Today, the Dow ...

Costco (COST) reported $58.52 billion in revenue for the quarter ended May 2024, representing a year-over-year increase of 9.1%. EPS of $3.78 for the same period compares to $3.43 a year ago. ...