Costco posts strong quarter; up store openings; no membership fee hike — yet
Costco Wholesale Corp.’s new fiscal year is off to a strong start with the company reporting better-than-expected earnings and revenue for its first quarter.
For its full fiscal year, the membership warehouse club giant plans to open 33 locations, including two relocations, up from the 23 clubs it opened in 2023. The openings include its sixth location in China.
The results come as the company is set to undergo a leadership transition. Longtime CEO Craig Jelinek will step down, effective Jan. 1, 2024. He will be suceeded by Ron Vachris, who has served as COO and president since February 2022.
Costco's net income totaled $1.58 billion, or $3.58 per share, for the quarter ended Nov.20, compared to $1.36 billion, $3.07 per share, in the year-ago period. Analysts had expected earnings of $3.41 per share.
This year’s results included a tax benefit of $44 million, $0.10 per diluted share, related to stock-based compensation.
Net sales rose 6.1% to $56.72 billion,up from $53.44 billion. The company said that net sales benefited by approximately one-half to one percent in the U.S. and worldwide from the shift of the fiscal calendar, as a result of the fifty-third week in fiscal year 2023. Total revenue rose to $57.80 billion, beating expectations of $57.71 billion.
Total company comparative sales rose 3.8%. Comp sales rose 2% in the U.S., and 6.4% in Canada. Other international comp sales increased 11.2%. E-commerce comps increased 6.3%.
Membership fees totaled $1.082 billion, up from $1 billion in the year-ago quarter. At the end of the quarter, Costco had 129.5 million cardholders, up 7.1% from last year.
On the company’s earnings call, CFO Richard Galanti was once again questioned by analysts about a potential membership fee hike.
"I'll use my standby answer, my answer, it's a question of when, not if," Galanti. "But at this juncture, we feel pretty good about what we're doing."
Costco said that its board has declared a special cash dividend on Costco common stock of $15 per share, payable Jan. 12, 2024, to shareholders of record as of the close of business on Dec. 28, 2023. The aggregate amount of the payment will be approximately $6.7 billion.
Costco currently operates 871 warehouses, including 600 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.