Costco Wholesale Corporation (COST) is gearing up to unveil its fourth-quarter financial results on Thursday after market close. The spotlight will likely be on the recent membership fee increase and its impact on the company’s performance.
Analysts are expecting revenue of $79.97 billion for the quarter, a slight increase from the $78.94 billion generated in the same period last year. However, Costco has missed analyst revenue estimates in three of the past five quarters and six out of the last ten. Earnings per share are projected to reach $5.08, up from $4.86 in the previous year’s fourth quarter. The company has consistently exceeded earnings expectations in recent quarters, hitting the mark in the last six consecutive quarters and nine out of the last ten.
The recent membership fee increase, announced in July and implemented on September 1st, is expected to be a key discussion point. While the impact on the current quarter might be minimal, analysts and investors will be watching for signs of an increase in new memberships and renewals, as consumers might rush to lock in the lower rate. Moreover, Costco might provide guidance on the potential long-term revenue impact of the fee hike.
Data from Placer.ai indicates a surge in visitor traffic to Costco stores during the quarter. June saw a 10.5% year-over-year increase, followed by 7.6% in July and 10.6% in August. This growth outpaced other retail giants like Target, Walmart, and BJ’s Wholesale Club. Additionally, Costco shoppers are spending more time in stores, suggesting potential for larger purchases.
The key question for investors is whether the increased foot traffic translated into robust sales growth and higher average purchase sizes. Costco’s strong visitor numbers in 2024, coupled with the potential benefits of the membership fee increase, suggest a positive outlook for the company, especially during the upcoming holiday season.
Costco shares are currently trading at $908.22, within a 52-week range of $540.23 to $923.83. The stock has experienced a notable year-to-date rise of 39.6% in 2024.
The company’s recent appointment of a new CFO also adds to the narrative, but it remains to be seen whether the iconic $1.50 hot dog combo price will remain unchanged.
