Costco tops quarterly results on robust consumables demand

Costco tops quarterly results on robust consumables demand

Costco tops quarterly results on robust consumables demand By Reuters

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Stock Markets 7 minutes ago (Sep 22, 2022 05:10PM ET)

(C) Reuters. FILE PHOTO: A Costco truck makes a delivery to a Costco store in Carlsbad, California, U.S., May 8, 2017. REUTERS/Mike Blake/File Photo

By Ananya Mariam Rajesh

(Reuters) -Costco Wholesale Corp topped Wall Street estimates for quarterly results on Thursday, helped by strong demand for its fresh food, candies and fuel offerings despite rising inflation.

However, the company’s costs during the reported quarter rose as it battles higher freight and labor costs making it expensive to ship inventories, sending its shares down about 3% in extended trading amid broader market declines.

Costco (NASDAQ:COST) benefits from strong spending by well-to-do Americans with club memberships even as lower-income consumers spend lesser, hit by rising prices of everything from edible oils to gas due to the Ukraine war and supply chain disruptions.

The membership-only retail chain’s strong quarterly results comes at a time when Target Corp (NYSE:TGT) reported a fall in quarterly profit as consumers squeezed by higher prices curtailed spending on non-essential items.

Telsey Advisory Group analyst Joseph Feldman said that in the current environment, consumers are looking to save money – including the affluent ones, which Costco caters to. “That bodes well, since they sell a lot of food and consumables and they help people save money.”

The big-box retailer’s total revenue rose 15% to $72.10 billion in the fourth quarter, beating analysts’ average estimate of $72.04 billion, according to IBES data from Refinitiv.

Excluding items, Costco earned $4.20 per share, beating estimates of $4.17 per share.

The company’s revenue from memberships, which are priced between $60 and $120 per year and account for most of Costco’s gross margin, rose to $1.33 billion from $1.23 billion, a year earlier.

Costco tops quarterly results on robust consumables demand

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