Costco Wholesale (COST) reported mixed earnings for its fiscal first quarter late Thursday, after its first membership fee hike in seven years. Costco stock wobbled in extended trading.
Ahead of the Costco earnings report, the retail giant earned a significant price-target hike on the potential for share gains. Further, the IBD Leaderboard stock briefly crossed $1,000 per share for the first time on Wednesday, making a new high after finding support at its 21-day exponential moving average.
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Costco Earnings, Sales Growth Accelerates
For the three months ended Nov. 24, Costco delivered EPS of $4.04 a share, up 13% vs. a year earlier. The retail leader posted revenue of $62.151 billion, up about 8%. Analysts according to FactSet had projected that the club membership retailer would earn $3.79 per share on revenue of $62.176 billion.
Growth picked on the top and bottom lines.
For Q1, same-store sales rose 7.1% adjusted. Going into the report, analysts had forecast same-store sales rising 5.2%, according to FactSet. Membership fee income rose 7.8% to $1.166 billion, almost in line with views.
E-commerce sales grew 13%, year over year, during the quarter. However, it slowed sharply from a 19.5% gain in the prior fourth quarter. An accompanying earnings presentation on Thursday said top Q1 digital sales categories included gold and jewelry, hardware and gift cards, among other things.
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Costco raised its basic annual membership fee on Sept. 1 for the first time since 2017, to $65 from $60. The warehouse club said most of the benefit from the hike will come in the latter half of 2025 and into 2026.
Outlook for the second quarter, which includes the upcoming holidays, will be watched. The Costco earnings report follows a reassuring holiday outlook from Walmart (WMT) in November.
Ahead of the Q1 report, analysts expected Costco earnings of $17.86 per share for the full year, a 7.8% increase.
Costco Stock Rises Near Highs
In late trading, Costco stock wavered before edging down 0.3%. In regular Thursday stock market action, Costco stock shed 0.6%, near 988. Shares pegged an all-time high, above 1,007, on Wednesday. The retailer is extended from a September breakout past 923.83, meaning shares are no longer in buy range.
The relative strength line for COST stock is near highs as well.
This week, analysts at Oppenehimer raised their price target on Costco stock to $1,075 from $980, a roughly 10% increase. That suggests more upside for the outperform-rated retail giant’s shares, which have already rallied 50% so far in 2024.
Oppenheimer analyst Rupesh Parish continues to see a strong outlook for market share gains and believes Costco can sustain top-line momentum, according to an analyst note seen by TheFly.com.
The firm also highlighted Costco’s merchandising efforts, from gift cards to more premium brands.
Costco, Walmart Turned Into Major Inflation Winners
Investors are watching the impact of lingering inflation on consumers. The retail sector could be especially vulnerable to inflationary impact from incoming President Donald Trump’s tariff policies.
But both Costco and Walmart, major discount retailers, turned into inflation winners. As consumers hunted for value, they seemed to favor Costco and Walmart over Target (TGT).
Further, both Walmart and Costco are growing e-commerce sales at a faster clip than Amazon.com (AZMN), though their e-commerce businesses are far smaller.
Shares of Walmart and Amazon edged lower, near highs, on Thursday. Target stock also nudged down.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
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