Costco has also been drawing in more customers by consistently keeping prices low on certain items, such as butter and eggs.Gene J. Puskar/The Associated Press
Costco Wholesale COST-T beat fourth-quarter revenue and profit estimates on Thursday, as Americans hunting for bargains flocked to the membership-only retail chain to snap up lower-priced essentials.
With inflation, triggered by tariffs, pressuring household budgets, consumers have dialled down on dining out and are increasingly shifting toward cheaper alternatives, which has helped retailers such as Costco buck the broader industry slowdown.
Costco has also been drawing in more customers by leaning on its flagship private label, Kirkland Signature, while also consistently keeping prices low on certain items, such as butter and eggs, and extending gas station hours.
“Costco appears to be reinvesting part of last year’s membership fee increase into sharper pricing for members while allowing the remainder to flow through to the bottom line, a win-win for both members and shareholders,” said Arun Sundaram, analyst with CFRA Research.
The company, which hiked its membership fee last year to US$65 for Gold Star members and US$130 for Executive members, saw its earnings from the fees rise 14 per cent to US$1.72-billion in the reported quarter.
Its revenue came in at US$86.16-billion for the three months ended Aug. 31, compared with analysts’ average estimate of US$86.06-billion, according to data compiled by LSEG.
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Total same-store sales, excluding gas, rose 6.4 per cent, compared with estimates of a 6.44 per cent increase.
U.S. grocer Kroger and retail behemoth Walmart also saw sales rise, due to a surge in demand for value products from customers across all income levels.
Shares of Costco were down 1 per cent after the bell.
Excluding items, the company earned a quarterly profit of US$5.87 per share, compared with analysts’ average estimate of US$5.80.