Costco (COST) is slinging a lot of gold bars as prices for the yellow metal continue to rise.
Gold sales rose by “double digits” in the most recent quarter, Costco CFO Gary Millerchip told analysts during its earnings call Thursday evening. Millerchip added that gold was a “meaningful tailwind” for e-commerce sales in the quarter.
Costco began selling gold bars in the fall of 2023. Wells Fargo analysts estimate that Costco sells $100 million to $200 million worth of gold bars every month.
The latest gold performance led to an ironic moment as Costco’s call neared its end.
Veteran Evercore ISI analyst Greg Melich asked executives, “Given the non-food, the success there, … I’m just curious: Are there plans to maybe bring Kirkland Signature into the gold bullion market?”
Kirkland Signature is Costco’s major private label company.
“There are no plans at this time,” said Costco CEO Ron Vachris.
The gold rush at the warehouse club is pushing futures for the metal hit (GC=F) to record highs at $2,708.70 an ounce during Thursday’s trading session. Year to date, gold is up 30%, with the Fed’s decision to cut rates by half a percentage point last week further boosting gold prices.
Top gold stocks like Freeport McMoRan (FCX) and Barrick Gold (GOLD) are up as much as 22% and 18%, respectively, through 2024.
On its website, Costco sells its 1 oz gold bar for $2,679.99. You must be a member to purchase the precious metal. It is also non-refundable and there is a limit of five total units per membership.
It’s likely that Costco’s gold business will remain lucrative in the near term, experts suggest.
IDX CIO Ben McMillan told Yahoo Finance this week that after being “sleepy” for years, gold is now firing on all cylinders as investors look to de-risk their portfolios.
“Gold has historically been quite associated with very risky, flight-to-safety transactions, such as hard landing recessions,” McMillan said.
Despite strong gold sales, Costco’s bread and butter still sells products like, well, bread and butter to price-conscious consumers.
Fourth quarter fiscal same-store sales growth was 6.9%, compared to estimates of 6.4%. E-commerce sales rose 19.5%, slightly lower than the 19.63% growth rate Wall Street had forecast.
Sales were driven by growth in appliances, food, health and beauty aids, tires, toys and gift cards, among others.
Shares of Costco fell 1.5% in premarket trading Friday.
“Overall, we believe that strong comparable sales and membership growth, and solid member retention, indicate that the company’s value proposition remains attractive, with strong market share gains across most business areas. We expect the recently implemented increase in membership fees to be largely reinvested, further driving revenue, comp and visitor growth over the next twelve to eighteen months,” Stifel analyst Mark Astrachan wrote in a client note.
Astrakhan maintained a buy rating on the stock.
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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