Costco posted better-than-expected quarterly earnings and revenue as strong e-commerce sales and increased in-store traffic fueled solid results. The warehouse club said net income would be $1.80 billion, or $4.04 a share, for the first quarter compared with $1.59 billion, or $3.58 a share, in the same period last year. Revenue rose to $62.15 billion, topping the consensus estimate of $62.08 billion.
E-commerce sales was the biggest driver, up 13 percent year over year, and comparable sales rose 5.2 percent. The company’s traffic in stores and on the Web was higher, with global traffic up 5.1 percent and U.S. traffic up 4.9 percent. Even with lower gas prices a source of challenge, the average ticket at Costco was slightly up, 0.1 percent worldwide, and 0.3 percent in the United States.
Part of Costco’s success can be contributed to its value proposition, whereby inflation-driven cost pressures kept consumers looking for bulk buys. The private-label brand, Kirkland Signature, also continued to grow better than the business as a whole. Categories like jewelry, luggage, home furnishings, and sporting goods all saw double-digit sales growth, while fresh food categories like produce and meat experienced strong gains.
Costco’s membership revenue stood at $1.17 billion, beating analysts’ estimate; however, CFO Gary Millerchip said the recent fee hike had only incidental impact on the quarter due to deferred accounting. Membership renewal rates were also stable at 90.4%, and total membership stood at 77.4 million paid households with an increase of 8% yearly.
Costco’s expansion also continues to be on schedule, with seven new club openings during the quarter and 29 for the fiscal year, of which 10 are international clubs. This expansion, combined with strength elsewhere, including its bakery division, where it sold more pies and pizzas than ever, continues the company’s upward trend. The stock has risen nearly 50% year-to-date, more than doubling the S&P 500’s 27% gain. As of Thursday’s, close, Costco shares were priced at $988.39.