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Costco Q4 Earnings Beat Estimates Even Though Revenues Miss
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Costco Wholesale Corporation (COST - Free Report) posted its fourth-quarter fiscal 2024 results, with earnings surpassing the Zacks Consensus Estimate but revenues falling short of the same. Both the metrics showed year-over-year growth. Comparable sales also increased, though the pace of growth moderated compared to the preceding quarter. This can be attributed to the cautious consumer spending environment and lower gasoline prices.
Costco’s Quarterly Performance: Key Metrics and Insights
Costco reported adjusted earnings of $5.15 per share for the quarter under review, surpassing the Zacks Consensus Estimate of $5.05 and delivering a 2% earnings surprise. The adjusted quarterly number increased 6% from the prior year period. Including a non-recurring tax benefit of $63 million (or 14 cents per share) stemming from a transfer pricing settlement and adjustments to tax reserves, quarterly earnings came in at $5.29 per share.
Total revenues, comprising net sales and membership fees, reached $79,697 million, marking a 1% increase from the year-ago quarter. However, the metric came below the Zacks Consensus Estimate of $79,753 million.
Costco’s comparable sales rose 5.4% year over year in the quarter, a deceleration from the 6.6% increase recorded in the preceding quarter. Comparable sales in the United States grew 5.3%, while Canada and Other International markets saw increases of 5.5% and 5.7%, respectively.
Costco’s strategic investments, customer-focused 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 90.5% in the quarter.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Achieves Membership Growth and Improved Margins
Costco's net sales rose a modest 1% year over year to $78,185 million, while membership fees increased slightly by 0.2% to $1,512 million in the reported quarter. The company ended the period with 76.2 million paid household members, up 7.3% from the prior year. The number of total cardholders grew 7% to reach 136.8 million.
Traffic or shopping frequency improved by 6.4% globally and 5.6% in the United States, while the average transaction or ticket decreased by 0.9% worldwide and 0.3% in the United States.
Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 6.9%. In the United States, comparable sales increased 6.3%, while Canada and Other International markets saw gains of 7.9% and 9.3%, respectively.
Costco’s e-commerce performance was strong, with comparable sales rising 18.9% year over year, or 19.5% after excluding the impact of gasoline prices and currency fluctuations.
Gross margin expanded 40 basis points year over year to 11%, exceeding our estimate of a 20 basis-point increase. Operating income grew 9.4% to $3,042 million, and the operating margin improved by 30 basis points to 3.8%, faring better than our projected 20 basis-point expansion.
Costco's Store Updates and Expansion Plans
Costco currently operates 891 warehouses. These include 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 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 fiscal 2024, the company achieved its target of 30 new warehouse openings, including one relocation. For fiscal 2025, it plans to open 29 warehouses, including three locations.
Costco’s Financial Health Snapshot
Costco ended the reported quarter with cash and cash equivalents of $9,906 million and long-term debt (excluding the current portion) of $5,794 million. Shareholders’ equity was $23,622 million. Management incurred capital expenditures of roughly $1.58 billion in the quarter.
Shares of this Zacks Rank #3 (Hold) company have advanced 23.1% in the past six months compared with the industry’s rise of 9.7%.
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The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of 9.6% and 18.7%, respectively, from the year-ago reported figure.
Burlington Stores, Inc. (BURL - Free Report) , a nationally recognized off-price retailer of high-quality, branded apparel, footwear, accessories, and merchandise, currently carries a Zacks Rank #2 (Buy). BURL has a trailing four-quarter earnings surprise of 18.4%, on average.
The Zacks Consensus Estimate for Burlington Stores’ current financial-year sales and earnings suggests growth of 10.1% and 30.5%, respectively, from the year-ago reported figure.
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The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings suggests growth of 5.7% and 65.2%, respectively, from the year-ago reported figure.
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Costco Q4 Earnings Beat Estimates Even Though Revenues Miss
Costco Wholesale Corporation (COST - Free Report) posted its fourth-quarter fiscal 2024 results, with earnings surpassing the Zacks Consensus Estimate but revenues falling short of the same. Both the metrics showed year-over-year growth. Comparable sales also increased, though the pace of growth moderated compared to the preceding quarter. This can be attributed to the cautious consumer spending environment and lower gasoline prices.
Costco’s Quarterly Performance: Key Metrics and Insights
Costco reported adjusted earnings of $5.15 per share for the quarter under review, surpassing the Zacks Consensus Estimate of $5.05 and delivering a 2% earnings surprise. The adjusted quarterly number increased 6% from the prior year period. Including a non-recurring tax benefit of $63 million (or 14 cents per share) stemming from a transfer pricing settlement and adjustments to tax reserves, quarterly earnings came in at $5.29 per share.
Find latest EPS estimates and surprises on Zacks Earnings Calendar.
Total revenues, comprising net sales and membership fees, reached $79,697 million, marking a 1% increase from the year-ago quarter. However, the metric came below the Zacks Consensus Estimate of $79,753 million.
Costco’s comparable sales rose 5.4% year over year in the quarter, a deceleration from the 6.6% increase recorded in the preceding quarter. Comparable sales in the United States grew 5.3%, while Canada and Other International markets saw increases of 5.5% and 5.7%, respectively.
Costco’s strategic investments, customer-focused 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 90.5% 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 a modest 1% year over year to $78,185 million, while membership fees increased slightly by 0.2% to $1,512 million in the reported quarter. The company ended the period with 76.2 million paid household members, up 7.3% from the prior year. The number of total cardholders grew 7% to reach 136.8 million.
Traffic or shopping frequency improved by 6.4% globally and 5.6% in the United States, while the average transaction or ticket decreased by 0.9% worldwide and 0.3% in the United States.
Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 6.9%. In the United States, comparable sales increased 6.3%, while Canada and Other International markets saw gains of 7.9% and 9.3%, respectively.
Costco’s e-commerce performance was strong, with comparable sales rising 18.9% year over year, or 19.5% after excluding the impact of gasoline prices and currency fluctuations.
Gross margin expanded 40 basis points year over year to 11%, exceeding our estimate of a 20 basis-point increase. Operating income grew 9.4% to $3,042 million, and the operating margin improved by 30 basis points to 3.8%, faring better than our projected 20 basis-point expansion.
Costco's Store Updates and Expansion Plans
Costco currently operates 891 warehouses. These include 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 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 fiscal 2024, the company achieved its target of 30 new warehouse openings, including one relocation. For fiscal 2025, it plans to open 29 warehouses, including three locations.
Costco’s Financial Health Snapshot
Costco ended the reported quarter with cash and cash equivalents of $9,906 million and long-term debt (excluding the current portion) of $5,794 million. Shareholders’ equity was $23,622 million. Management incurred capital expenditures of roughly $1.58 billion in the quarter.
Shares of this Zacks Rank #3 (Hold) company have advanced 23.1% in the past six months compared with the industry’s rise of 9.7%.
Don’t Miss These Solid Bets
Sprouts Farmers Market (SFM - Free Report) , which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 12%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of 9.6% and 18.7%, respectively, from the year-ago reported figure.
Burlington Stores, Inc. (BURL - Free Report) , a nationally recognized off-price retailer of high-quality, branded apparel, footwear, accessories, and merchandise, currently carries a Zacks Rank #2 (Buy). BURL has a trailing four-quarter earnings surprise of 18.4%, on average.
The Zacks Consensus Estimate for Burlington Stores’ current financial-year sales and earnings suggests growth of 10.1% and 30.5%, respectively, from the year-ago reported figure.
Chewy, Inc. (CHWY - Free Report) , a formidable player in the online pet retail market, currently carries a Zacks Rank #2. CHWY has a trailing four-quarter earnings surprise of 50.9%, on average.
The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings suggests growth of 5.7% and 65.2%, respectively, from the year-ago reported figure.