Costco Q3 comps up 6.6%, e-commerce soars 21%; set to open nine new U.S. clubs

Costco Wholesale Corp. turned in another strong quarter with earnings, revenue and same-store sales that beat Wall Street expectations amid gains in traffic and discretionary purchases.

“As inflation has leveled off, our members are returning to purchasing more discretionary items,”  CFO Gary Millerchip told analysts on the company’s earnings call. “And growth in the category was led by toys, tires, lawn and garden, and health and beauty aids.”

This was Millerchip's first earnings call as Costco CFO. He was appointed to the position in March, succeeding the company's longtime finance head, Richard Galanti, who retired after nearly 40 years in the role. Millerchip joined Costco from The Kroger Co., where he was finance chief.

The membership warehouse club retailer disappointed the Street by once again not raising its membership fee. On the call, Millerchip, when asked about a hike, said it was still a matter of “when” rather than “if.” 

Costco’s net income rose to $1.68 billion, or earnings per share of $3.78, for the quarter ended May 12, up from $1.30 billion, or $2.93 per share, in the year-ago period. Analysts had expected earnings per share of $3.70.

Total revenue rose to $58.515 billion from $53.648 billion, topping estimates of $58.02 billion. Net sales rose 9.1%  to $57.39 billion. Membership fees rose 7.6% to $1.12 billion.

Total comparable sales rose 6.6%, more than expected. U.S. same-store sales increased 6.2%, with traffic up 5.5% and the comparable ticket up 0.7%.

E-commerce sales soared 20.7%, led by gold and silver bullion, gift cards and appliances. Costco ended the quarter with 74.5 million paid members, up 7.8% from a year ago.

Costco currently operates 878 warehouses, including 605 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the U.K., 18 in South Korea, 15 in Australia, 14 in Taiwan, seven in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

For the remainder of fiscal 2024, Costco plans to open another 12 new locations, nine in the U.S., two in Japan, and one in South Korea.