Costco Wholesale Corporation COST posted first-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and increased year over year. The company also registered decent comparable sales growth during the quarter.
Costco’s Quarterly Performance: Key Metrics and Insights
Costco reported adjusted earnings of $3.82 per share for the quarter under review, surpassing the Zacks Consensus Estimate of $3.79. The adjusted quarterly number increased by 9.8% from the prior-year quarter. Including a tax benefit of $100 million (or 22 cents per share) related to stock-based compensation, quarterly earnings came in at $4.04 per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Total revenues, comprising net sales and membership fees, reached $62,151 million, marking a 7.5% increase from the year-ago quarter. The metric also came ahead of the Zacks Consensus Estimate of $62,045 million.
Costco’s comparable sales rose 5.2% year over year in the quarter, falling short of our estimate of a 5.4% increase. Comparable sales in the United States grew 5.2%, while Canada and Other International markets saw increases of 5.8% and 4.7%, respectively.
Costco’s strategic investments, customer-centric approach and merchandise initiatives, along with its emphasis on membership growth, have helped it capture market share and maintain steady revenue growth. By prioritizing value and quality, the company has built strong customer loyalty, leading to an impressive membership renewal rate of 90.4% in the quarter.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Costco Achieves Membership Growth and Improved Margins
Costco's net sales rose 7.5% year over year to $60,985 million, while membership fees increased 7.8% to $1,166 million in the reported quarter. The company ended the quarter with 77.4 million paid household members, up 7.6% from the prior year. The number of total cardholders grew 7.2% to reach 138.8 million.
Traffic or shopping frequency improved by 5.1% globally and 4.9% in the United States, while the average transaction or ticket grew by 0.1% worldwide and 0.3% in the United States.
Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 7.1%. In the United States, comparable sales increased by 7.2%, while Canada and Other International markets saw gains of 6.7% and 7.1%, respectively.
Costco’s e-commerce performance was strong, with comparable sales rising 13% year over year, or 13.2%, after excluding the impact of gasoline prices and currency fluctuations.
The gross margin expanded 24 basis points year over year to 11.3%, exceeding our estimate of a year-over-year flat margin. The operating income grew 10.7% to $2,196 million, while the operating margin improved by 10 basis points to 3.5%, falling short of our anticipated 20 basis-point expansion.
Costco's Store Updates and Expansion Plans
Costco currently operates 897 warehouses. These include 617 in the United States and Puerto Rico, 109 in Canada, 41 in Mexico, 36 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden.
During the quarter under discussion, Costco opened seven warehouses, including one relocation. Of the six new warehouses opened, four were outside the United States. After the end of the quarter, one warehouse was inaugurated in Pleasanton, CA. For fiscal 2025, management plans to open 29 warehouses, including three relocations.
Costco’s Financial Health Snapshot
Costco ended the reported quarter with cash and cash equivalents of $10,907 million and long-term debt (excluding the current portion) of $5,745 million. Shareholders’ equity was $24,451 million. Management incurred capital expenditures of roughly $1.26 billion in the quarter. Costco foresees capital expenditures of about $5 billion for fiscal 2025.
Shares of this Zacks Rank #3 (Hold) company have advanced 15.5% in the past six months compared with the industry’s rise of 10.5%.
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