Key Stats for Costco Stock
- Pre-market Price Change for Costco stock: -1%
- $COST Share Price as of Dec. 11: $884
- 52-Week High: $1,078
- $COST Stock Price Target: $1,053
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What Happened?
Costco (COST) stock is down 1% in pre-market trading even as the warehouse retailer crushed Wall Street’s expectations in its fiscal first quarter. The company reported earnings of $4.50 per share, beating the $4.27 estimate, while revenue came in at $67.31 billion, beating the $67.12 billion estimate.
Net income rose to $2 billion from $1.80 billion in the year-ago quarter. Revenue increased 8.2% year-over-year, driven by strong digital sales growth and new store openings. Comparable sales grew 6.4% globally and 5.9% in the U.S.
CFO Gary Millerchip highlighted digital as a major strength, with e-commerce sales jumping 20.5% year-over-year. Website traffic increased 24% and app traffic surged 48%. Same-day delivery through Instacart, Uber, and DoorDash grew even faster than overall digital sales.
The holiday shopping period got off to a strong start as well. Black Friday set a record for Costco’s U.S. e-commerce business with over $250 million in non-food orders.
The company’s bakeries sold 4.5 million pies in the three days leading up to Thanksgiving, while food courts sold 358,000 pizzas on Halloween alone, up 31% from last year.
CEO Ron Vachris said the company opened eight new warehouses during the quarter, bringing the total count to 921 worldwide. He confirmed plans to continue opening 30 or more locations per year going forward.
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What the Market Is Telling Us About Costco Stock
The strong reaction to COST stock suggests investors are encouraged by the company’s accelerating momentum across multiple growth drivers. Membership remains healthy, with total paid members up 5.2% to 81.4 million and executive memberships up 9.1% to 39.7 million.
The September 2024 membership fee increase in the U.S. and Canada accounted for less than half of membership income growth, which jumped 14% year-over-year. This shows the underlying business strength beyond the price hike.
Digital transformation is paying off for COST stock. Management highlighted AI-driven improvements in pharmacy inventory management, boosting in-stock rates to over 98% while driving mid-teen prescription growth.
Similar AI tools are being deployed in the gas business to improve inventory management. Technology investments are also driving warehouse productivity.
Locations using pre-scan checkout technology have seen speed improvements of up to 20%, helping offset wage increases and extended operating hours.
Non-food categories showed particular strength, with pharmacy, gold and jewelry, tires, small electronics, and apparel all posting double-digit growth.
Management said buyers are doing an excellent job navigating tariffs by changing sourcing countries, buying more U.S.-made products, and leaning into Kirkland Signature private label.
Gross margins expanded slightly despite inflation remaining at low single digits in non-foods and low-to-mid single digits in food.
The company implemented strategic price cuts on items such as Kirkland Signature chicken pot pie, bacon, whipped cream, and walnuts to maintain its value leadership.
Renewal rates dipped just 10 basis points to 92.2% in the U.S. and Canada and 89.7% worldwide, better than management expected.
The slight decline reflects younger members signing up digitally, who renew at lower rates. However, targeted communications to this group are already showing early success in improving retention.
For COST stock, the combination of steady comparable sales around 6.5%, strong membership growth, digital acceleration, and productivity improvements points to continued market share gains and operating leverage ahead.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
