Costco announced financial results that beat
expectations. And while much of its sales gains can be chalked up to higher prices, the company says consumers’ underlying shopping behaviors are steady. It also reported a record level of
membership renewal.
The Seattle-based warehouse club, famous for selling everything from electronics to coffins to clothing, has grown to be a bellwether for middle-income shoppers. And for
the fourth quarter of its fiscal year, sales gained 15.2% to reach $70.76 billion, up from $61.44 billion in the comparable period last year. Net sales for the fiscal year increased 16.0%,
to $222.73 billion, from $192.05 billion in the previous year. In the U.S., comparable sales rose 9.6% and 10.4% overall. Ecommerce notched a gain of 8.4%.
Net income for the
period hit $1.87 billion, up from $ $1.67 billion last year.
In a conference call webcast for investors, Richard A. Galanti, executive vice president and chief financial officer, says
Costco ended the year with 65.8 million paid members, an increase of more than 6%. Renewal rates rose to a record 92.6% in the U.S. and 90.4% worldwide.
The company says it has no immediate
plans to increase membership fees.
Penetration in its executive membership hit 44%, another record, with more shoppers signing on for the much-heftier annual fee in exchange for a 2% yearly
reward.
“We haven’t seen any big change,” he says, when asked about the health of consumer spending. And spending on Kirkland Signature, its popular private label brand, has
remained constant.
And while sales of fresh products, which drove outsized growth at the beginning of the pandemic, have slowed, they continue to be strong.
While Costco, with 838
warehouses worldwide, has been wrestling with inflation running at about 8%, “we are starting to see some light at the end of the tunnel,” said Galanti.
The news reassured
observers, who are watching retailers closely for indications that people are cutting back on spending due to economic turbulence.
“The Costco train remains on track and well positioned
to take share in any economic environment,” writes Peter Benedict, an analyst who follows the company for Baird.
“We continue to see Costco as one of the most competitively
advantaged retailers worldwide,” writes Zain Akbari, an analyst who follows Costco for Morningstar, citing its ongoing resilience despite inflation.
“Sales momentum remained strong
to finish the year,” he says. “With consumers focused on value amid inflation and economic uncertainty, we are not surprised that members continue to look to Costco for savings.”