Core Viewpoint - Costco Wholesale continues to demonstrate strong performance in the retail sector, achieving significant revenue and earnings growth despite tariff challenges [1][3]. Financial Performance - Quarterly revenue increased by 8% to $63.21 billion, with adjusted earnings per share (EPS) rising 13% to $4.28, surpassing analyst expectations [5]. - Same-store sales rose 8% when adjusted for gasoline prices and foreign currency, with U.S. same-store sales up 7.9% and Canadian comparable-store sales climbing 7.8% [6]. - E-commerce revenue grew by 15.7% on an adjusted basis, indicating strong online sales performance [6]. Customer Experience Initiatives - The company is investing in technology to enhance the checkout process and has extended gas-station hours [4]. - A "buy now, pay later" program for big-ticket items has been introduced, showing initial promise [4]. Membership Growth - Membership-fee revenue increased by 10.4% to $1.24 billion, benefiting from a fee hike implemented in September [8]. - Memberships rose by 6.8% to 79.6 million paid households, with higher-cost executive memberships increasing by 9% [8]. Market Position - Costco's same-store sales growth outperformed competitors, with Target reporting a decline of 3.8% and Walmart achieving 4.5% growth [11]. - The company continues to gain market share as consumers are attracted to the value offered by warehouse stores [11]. Expansion Plans - Costco opened eight new locations in the quarter, bringing the total to 905 warehouse stores, with plans to open nine more in the upcoming quarter [10]. - Approximately 80% of new openings will be in high-traffic markets, which may cannibalize some existing store sales but will help alleviate congestion [10]. Valuation Insights - The stock trades at a forward price-to-earnings (P/E) ratio of 57.5, reflecting a premium valuation that has expanded significantly in recent years [12]. - Despite concerns over high valuation relative to revenue growth, the stock's momentum remains strong [15].

Core Viewpoint - Costco's recent earnings report showed strong revenue growth despite a slight earnings miss, indicating resilience in a challenging macroeconomic environment and presenting a potential buying opportunity for investors [1][2]. Group 1: Financial Performance - In Q2 of fiscal 2025, Costco's revenue increased by 9% year over year to $63.72 billion, surpassing analysts' expectations by $640 million [1]. - Net income rose by 3% to $1.79 billion, or $4.02 per share, although it fell short of the consensus forecast by $0.09, primarily due to higher merchandise costs [2]. Group 2: Comparable Store Sales - Adjusted comparable store sales (comps) grew by 10.6% in fiscal 2022, 5.2% in fiscal 2023, and 5.9% in fiscal 2024, with an additional rise of 8.1% in the first half of fiscal 2025 [3]. - The growth in comps suggests that Costco is well insulated from inflation, which typically drives consumers to bulk purchases [4]. Group 3: Membership Growth - The total number of Costco cardholders increased by 6.6% year over year to 140.6 million, indicating strong retention of pricing power [6][7]. - The gross margin expanded by five basis points to 10.85%, while the operating margin rose by 10 basis points to 3.63% during the quarter [7]. Group 4: Membership Renewal Rates - Worldwide renewal rates remained steady at 90.5%, with the U.S. and Canada renewal rate increasing by 10 basis points to 93% [8][9]. - High renewal rates suggest that memberships are sticky, providing a competitive edge against rivals like Walmart's Sam's Club and BJ's Wholesale Club [9]. Group 5: Expansion Strategy - Costco has consistently opened new warehouses, increasing the number from 838 in fiscal 2022 to 890 in fiscal 2024, and reaching 897 by the end of Q2 2025 [10][11]. - This ongoing expansion reflects Costco's confidence in its business model despite macroeconomic challenges [11]. Group 6: Valuation Justification - Analysts project Costco's revenue and earnings per share to grow at compound annual growth rates of 7% and 10%, respectively, from 2024 to 2027 [12]. - The company's robust business model supports its premium valuation, trading at 48 times next year's earnings [12][13].

Costco Wholesale delivered solid earnings with increased revenue and strong e-commerce performance, though pressures from operating expenses remain.Costco Wholesale (COST -2.02%), the leading membership warehouse retailer, announced its second quarter fiscal 2025 results on March 6, 2025. Highlighting robust sales growth, it reported $62.53 billion in net sales, a 9.1% increase compared to the same quarter last year. Membership fees added an additional $1.193 billion, up 7.3%. Net income showed modest growt ...