Costco’s stock fell -$0.90 per share Friday morning following Costco’s fiscal Q3 2023* earnings release on Thursday, May 25, but quickly bounced back with the rest of the market, rising over +3% or +$16 by midday. Costco continued to see the second straight quarter of slowing sales (driven by weakness in big-ticket discretionary items & eComm). Costco’s sales again grew in the U.S. and internationally when excluding gas and foreign exchange impacts. Topline, new memberships, and renewals remain positive. Pricing continues to be something Costco is focused on every day to drive sales and give back to the members.
The retailer continues to hold off on raising member fees as members remain pressured by inflation (the last increase was in 2017). Membership fees for the quarter came in higher than a year ago but lower than Wall Street estimates. Commodity prices continue to drop, which will likely lead to more challenging price negotiations for suppliers (estimated 3-4% inflation this quarter). Costco has set up a 2-year plan to overhaul and revamp their website and mobile phone app to provide a better experience to members with an emphasis on digital. Traffic continues to grow, but average ticket was down 3.5% in the U.S.
*Note: Costco’s fiscal year runs from September to August, making their fiscal Q3 (12 weeks from February to May), comparable to other retailers’ Q1 results.
You can download Harvest Group’s full earnings recap with unique takeaways for suppliers here:
