By Anuja Bharat Mistry Dec 11 (Reuters) – Costco Wholesale beat Wall Street estimates for first-quarter revenue and profit on Thursday, as consumers snapped up affordable essentials and nice-to-have items at its stores ahead of the crucial holiday season. Retailers as well as dollar chain operators have been able to draw customers across income groups […]
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Costco beats quarterly earnings estimates on strong demand ahead of holiday season
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By Anuja Bharat Mistry
Dec 11 (Reuters) – Costco Wholesale beat Wall Street estimates for first-quarter revenue and profit on Thursday, as consumers snapped up affordable essentials and nice-to-have items at its stores ahead of the crucial holiday season.
Retailers as well as dollar chain operators have been able to draw customers across income groups to their stores with the help of attractive offers and seasonal deals, even at a time when surging inflation and a weak labor market has turned shoppers cautious.
Costco’s focus on providing value and leaning on items from its flagship private label, Kirkland Signature, has resonated with its members, who usually remain picky while spending on discretionary items.
“Costco’s latest results are strong and could be a reflection of how consumers are shopping for the holiday season … Shoppers are not ignoring budgets, but are looking to stretch their dollar further, and this is an area Costco helps with,” said Greg Zakowicz, ecommerce and retail advisor to marketing platform Omnisend.
Same-store sales, excluding gas, of Costco rose 6.4% for the quarter ended November 23, compared with analysts’ average estimate of a 5.82% increase as per data compiled by LSEG.
“We continue to believe that the company’s heavy exposure to higher-income households and deep value model enable it to continue to gain market share,” analysts at Truist Securities wrote in a note.
Walmart, Dollar Tree and Dollar General, after strong quarterly results highlighted that, along with lower-income consumers, slightly affluent shoppers are also trading in to their stores.
Costco said it also gained from strong performance in its same-day delivery service offered in partnership with Instacart in the U.S. as well as UberEats and DoorDash internationally.
Costco posted quarterly revenue of $67.31 billion, above the estimates of $67.14 billion.
It earned a quarterly profit of $4.50 per share topping estimates of $4.27 per share.
Shares of the company were marginally down at $877.71 after the bell.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Krishna Chandra Eluri)