Costco’s third-quarter profits topped all key metrics, after shares closed at a record high

Costco (COST) had another strong quarter as consumers sought affordable prices on everyday essentials.

As of Thursday afternoon, the company reported net revenue of $58.52 billion, compared to estimates of $57.98 billion. Its adjusted profit of $3.78 also beat estimates of $3.70.

Same-store sales, excluding fuel, jumped 6.5%, driven by growth in its international operations (up 8.5%), Canada (up 7.4%) and the United States. United (up 6%).

During the quarter, the wholesale retailer saw foot traffic increase year over year, surpassing Sam’s Club (WMT) and BJ’s Wholesale Club (BJ), according to Placer.ai.

E-commerce is also a bright spot, beating expectations for an 11.5% year-over-year increase with a 20.7% increase.

In the previous quarterly report, digital sales grew more than 18% year over year, fueled by demand for gold bars, silver and home appliances, the former said then Costco Chief Financial Officer Richard Galanti during the earnings call.

Membership dues, a key revenue source, are in line with estimates at $1.12 billion, an increase of 7.6% from last year.

A Costco Gold Star membership costs $60 per year, while an executive membership costs $120. Some on the Street predicted last year that Costco would raise its fees this summer.

Costco shares are up 25% year to date, outpacing the S&P 500’s (^GSPC) 10% gain, and closed at a record high ahead of Thursday’s release of its fiscal third-quarter results.

“We continue to believe a premium valuation is warranted, given the superior growth prospects of Costco’s global units, its leading competitive position, and its track record of stock gains,” wrote Rupesh Parikh , an Oppenheimer analyst, in a note to clients ahead of the report, adding that “management can unlock even more shareholder value over time by generating alternative revenue streams.”

Christopher Horvers, an analyst at JPMorgan, wrote that the company’s shares continue to benefit from a higher-income audience, as well as a long history of consistent market share gains.

Wall Street is eager to see how non-food categories like the jewelry department (including gold bars) perform, as well as traditional fresh food strength, led by meat and produce.

This comes as consumers look for value in groceries. In April, food prices jumped 1.1% from a year ago, but fell 0.2% from March, according to the U.S. Bureau of Labor Statistics.

A family checks out their groceries at a Costco Wholesale store on November 13, 2023, in Colchester, Vermont. (Robert Nickelsberg/Getty Images) (Robert Nickelsberg via Getty Images)

Here’s what Costco reported in its third quarter results, compared to Wall Street estimates:

Net sales: $58.52 billion versus $57.98 billion

Adjusted EPS: $3.78 vs. $3.70

Total company comparable sales, excluding fuel: 6.5%, compared to 5.93%

  • US same-store sales growth: 6% vs. 5.51%

  • Same-store sales growth in Canada: 7.4% vs. 6.96%

  • Other international: 8.5% versus 7.46%

E-commerce Growth: 20.7% versus 11.5%

Membership…

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