Costco (COST) is poised for another quarter in bulk as consumers look for wallet-friendly prices on everyday essentials.
According to Placer.ai, the wholesaler saw traffic increase year over year, beating out Sam’s Club (WMT) and BJ’s Wholesale Club (BJ). As of Thursday afternoon, the company is expected to report net sales of $57.98 billion, up 8.07% year over year, and adjusted earnings of $3.70, up 8%.
Same-store sales are expected to increase 5.93% from a year ago, led by growing international operations, up 7.46%. Same-store sales are expected to rise 6.96% in Canada and 5.51% in the US.
E-commerce is also expected to be a bright spot, with estimates of an 11.5% increase year-over-year.
In the previous quarterly report, digital revenue grew more than 18% year over year, driven by demand for gold bars, silver and appliances, Costco CFO Richard Galanti said during the earnings call.
Membership fees, a key revenue stream, are expected to reach $1.53 billion, up from $1.51 billion a year ago.
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 fees this summer.
Costco shares are up 22% this year, outpacing the S&P 500’s (^GSPC) gain of about 11%.
“We continue to believe that a premium valuation is warranted given Costco’s superior global growth prospects, leading competitive position and track record of driving stock gains,” Oppenheimer analyst Rupesh Parikh wrote in a note to clients, adding that “it management even increases shareholder value over time by encouraging alternative revenue streams.”
JP Morgan analyst Christopher Horvers wrote that the company’s shares continue to benefit from a higher income demographic, along with a long history of consistent market share gains.
Wall Street is eager to hear how non-food categories such as jewelry (including gold bars) have performed, along with the traditional strength of fresh food, led by meat and produce.
This is because consumers are looking for value when it comes to groceries. Grocery prices rose 1.1% in April from last year but fell 0.2% from March, according to the U.S. Bureau of Labor Statistics.
Horvers also expects that gas will return +70 basis points annually compared to inflation, and that the average selling price will be 5% higher than in April 2023.
The income overview:
Here’s what Wall Street expects from Costco in terms of fiscal third quarter earnings, compared to the prior year:
Net turnover: $57.98 billion, up from $53.65 billion
Custom EPS: $3.70, up from $3.43
Same-store sales growth: 5.93%, compared to 3.5%
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US same-store sales growth: 5.51%, up from 1.8%
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Same-store sales growth in Canada: 6.96%, up from 7.4%
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Other international: 7.46%, compared to 8.4%
E-commerce growth: 11.5%, compared to a decline of 9%
Membership costs: $1.53 billion, up from $1.51 billion
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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