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Costco (COST-0.68%) reported better-than-expected earnings on Thursday, fueled by solid revenue growth, strong e-commerce performance, and increased membership fees. The results extend a strong year for the retailer, whose shares have climbed nearly 50% in 2023, compared to the S&P 500’s 27% gain. The stock closed at $988.39.
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The company beat Wall Street’s expectations. The retailer reported revenue of $62.15 billion, about $4.04 earnings per share. Analysts had forecast revenue of $61.98 billion, approximately $3.79 earnings per share.
Membership fees also saw an increase, reaching $1.17 billion, up from $1.08 billion the previous year. Earlier this year, Costco announced a “Netflix-Style” crackdown on its membership and said it would raise the price of its Gold Star membership to $65 – a $5 bump that marked the first price hike since 2017. To offset the increase for new members, the company offered a special promotion in November for a one-year Gold Star Membership that came with a $45 Costco Shop Card.
Executives said during the company’s earnings call on Dec. 12 that online sales were primarily driven by shoppers buying items like furniture, sporting goods, and hardware in bulk. E-commerce sales rose 13% when compared to the previous year, fueled in part by partnerships with Uber (UBER+0.95%) and Instacart. These partnerships have allowed customers to quickly purchase items – such as a blender – at a lower cost and have them delivered faster.
Earlier this month, Costco recalled its store-branded Kirkland Signature organic eggs due to a potential salmonella contamination. The bacteria can cause serious infections, including stomach cramps and diarrhea, according to the U.S. Food and Drug Administration (FDA).
Additionally, the company reported a 15% decline in e-commerce sales the month prior, which it said was due to holiday shopping being delayed by a week compared to typical patterns. During that time, Costco pulled nearly 80,000 pounds of its store-branded butter after it was found to be missing a crucial allergy warning.
