Yahoo Finance Costco (COST) Posts Solid June Sales, Plans Membership Fee Hike
Costco Wholesale Corporation COST announced significant updates, including robust June sales figures and an upcoming membership fee increase. These developments highlight Costco's strong operational performance and its ability to drive revenue growth. This Issaquah, Washington-based company continues to excel due to its strategic growth initiatives, effective pricing strategies and steady membership trends.
Sales Performance Overview
In June, COST reported an impressive increase in comparable sales, achieving 5.3% growth during the five weeks ended Jul 7, 2024. This stellar performance follows consecutive increases of 6.4% and 5.6% in May and April, respectively. Breaking down the figures by region, comparable sales in the United States rose by 5.6%, in Canada by 5.2% and in Other International locations by 4.3%.
When excluding the impacts of changes in gasoline prices and foreign exchange rates, comparable sales for June rose 6.9%. The upside was driven by improvements of 6.3% in the United States, 8.4% in Canada and an impressive 8.7% in Other International locations. These figures highlight Costco’s resilience and ability to drive growth across various markets.
COST’s e-commerce sales surged 18.4% year over year or 19.1% when excluding the impact of gasoline prices and foreign exchange. The surge in online sales underscores the company's effective digital strategy and ability to cater to the evolving shopping preferences of consumers.
As a result, Costco's net sales for June increased 7.4%, reaching $24.48 billion, up from $22.78 billion in the same period last year. This follows improvements of 8.1% in May and 7.1% in April, reflecting a strong and consistent sales performance in the past few months.
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Membership Fees Increase
Costco announced its first membership fee increase since 2017, effective Sep 1, 2024. The retail giant will raise annual fees for U.S. and Canada Gold Star, Business and Business add-on members by $5, bringing the total to $65 annually. Executive Memberships will see a rise from $120 to $130 annually, accompanied by an increase in the maximum annual 2% Reward from $1,000 to $1,250. These changes are expected to impact approximately 52 million memberships, with more than half classified as Executive.
In the last reported quarter, the company reported a 7.6% increase in membership fee revenues, underscoring its significance to financial health. Membership fees contributed 1.9% to total revenues and boosted net income, illustrating their pivotal role in COST’s operational strategy.
The forthcoming fee hikes are anticipated to provide a significant boost to the bottom line, reinforcing its ability to sustain operational investments and maintain competitive pricing for its wide array of products.
Wrapping Up
Costco stands tall among its peers in the warehouse retail sector, boasting a wide array of high-quality merchandise. Its distinctive membership-based business model and pricing strength differentiate it from traditional competitors. The emphasis on bulk sales and efficient inventory management allows it to keep prices low, making it a preferred shopping destination for budget-conscious consumers.
We believe a favorable product mix, membership growth, pricing power and strong liquidity should benefit Costco. Shares of this Zacks Rank #3 (Hold) company have advanced 29.4% in the past six months compared with the Retail – Discount Stores industry’s rise of 18.8%.
3 Picks You Can’t Miss Out On
Here, we have highlighted three better-ranked stocks, namely Vital Farms VITL, Ollie's Bargain Outlet OLLI and J&J Snack Foods Corp. JJSF.
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 22.6% and 62.7%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 10.4%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings implies growth of around 8% and 12%, respectively, from the year-ago reported numbers.
J&J Snack Foods, a leader and innovator in the snack food and frozen beverage industry, currently carries a Zacks Rank #2. JJSF has a trailing four-quarter earnings surprise of 5.7%, on average.
The Zacks Consensus Estimate for J&J Snack Foods’ current financial-year sales and earnings calls for growth of around 1.6% and 17.6%, respectively, from the year-ago reported numbers.
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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
J & J Snack Foods Corp. (JJSF) : Free Stock Analysis Report
Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
