🛒 Costco Earnings: A Sneak Peek into Today’s Report!
September 26, 2023
It’s mum season in our neck of the woods, and around here that means a trip to Costco.
The company is set to report earnings today (Sept. 26) after the bell. So, what’s the scoop on the Costco’s performance and what does LikeFolio’s real-time data suggest is in store for its report tomorrow? Let’s dive in…
Monthly Performance Updates:
Costco steals our thunder when it releases sales updates every month. This also gives investors a sneak peek into core company trends.
August Sales: Costco's net sales in August saw a +5% YoY increase, building on a strong July. The strength was primarily driven by grocery and "staple" food items, with fresh foods like bakery and meat leading the way. However, non-foods and ancillary business sales saw a dip.
eCommerce: After a solid performance in July (+4.1% YoY), Costco's eCommerce comp sales slipped by -2.5% YoY in August. This reflects a decline in sales of large-ticket items like electronics and home furnishings.
eCommerce and Consumer Happiness: Our data suggests a continued tempering in Costco's eCommerce sales. Web visits have slipped by a point over the last month.
Additionally, Costco's consumer happiness stands at 67% positive, slightly behind Walmart's Sam's Club at 69% positive. The perceived savings at Sam's Club seem to be resonating more with consumers.
Mind Share and Expansion: Costco is a clear leader in consumer mindshare, holding a whopping 94% of mention volume. The company is also venturing into new territories, partnering with Sesame to offer online health checkups, aligning with the trend of retailers diving into the healthcare sector.
Membership Growth: Costco's membership base is solid and growing. With a renewal rate of 92.6% in the U.S. and Canada, the company reported a 6.1% increase in membership fee income last quarter. Interestingly, Costco hasn't raised its membership fees since 2017, even as competitors like Amazon and Sam's Club have. Any news of a fee increase could send shares higher.
Bonus Insight: Costco's recent crackdown on sharing membership cards might be contributing to its growth. The company has started checking licenses to confirm membership identity at self-checkout lanes, a move that's likely pushing more consumers to get their own memberships. You can see this in real time on the chart below in June.
As we approach earnings, our stance on Costco is neutral (-11). While the company is showing some signs of weakness, especially in eCommerce, its dominant position in bulk purchases and expanded innovative offerings (like low-cost lab work) make it a compelling long-term play. Given that Costco reports monthly, much of its earnings move might already be factored in. But as always, we'll be watching closely to see how things unfold.