Costco Wholesale Corporation (NASDAQ: $COST) is the world’s third-largest retailer behind Walmart and Amazon. It operates a chain of membership warehouses characterized by brand-name merchandise at significantly lower prices than conventional retailers. As of February 2024, it operates 871 war houses worldwide, with 602 in the United States.
On March 7, 2024, Costco announced its Q2 results (twelve weeks), and first 24 weeks of fiscal 2024 ended February 18, 2024.
Second Quarter Result & 24 Weeks Sales Ratio of 2024
Costco’s stock declined after the company revenue came in below estimates in the second quarter of 2024. The revenue is up by 5.7%, totaling $58.44 billion, but missed analysts’ prediction of $59.12 billion by 1.2%.
The earnings per share (EPS) came in at $3.91, beating estimates of $3.61 by 8.5%. Gross margin (GAAP) for Q224 stands at 12.5%, consistent with the corresponding quarter from the previous year.
Moreover, net sales rose 5.7% to $57.33 billion from last year’s $54.24 billion. The net sales for the first 24 weeks also increased by 5.9%, totaling $114.05 billion.
Furthermore, Costco’s net sales were negatively affected by 1.5% for the second quarter and 1% for 24 weeks of fiscal 2024 because of the fiscal calendar shift due to the additional fifty-third week in the previous year.
For the 4-week month of February ended on March 3, 2024, the company reported net sales of $18.21 billion, a 6.9% gain compared to $17.04 billion from the previous year. Net sales amounted to $123.15 billion for the initial 26 weeks, marking a 6.1 percent upturn from the $116.06 billion recorded last year.
CFO on Quarterly and February Result
In an earnings call, Costco CFO Richard Galanti said, “Sales of food and sundries, a category that includes snack foods and beverages, were up by mid single digits in the quarter.”
He added, “Ancillary businesses, which includes more service-related purchases like travel, were up by low single digits. Costco’s food court, pharmacy and optical centers were top performers in the quarter and gas was down low single digits as the price per gallon fell. More shoppers came to Costco, and they spent more on their shopping trips during the quarter. Traffic increased 5.3% across the globe and 4.3% in the U.S”.
Costco Selling Silver Coins and Gold Bars
In a CNN interview, the CFO said the company had started selling silver coins and gold bars for the first time. Costco is taking measures to replicate the success fueled by gold bars. Costco began offering $2,000 gold bars in September 2023, selling over $100 million worth of gold in the last quarter alone.
The move to offer precious metals is part of the company’s effort to reinforce the “treasure hunt” brand image.
In 2007, Costco founder Jim Sinegal said, “We try to create an attitude that, if you see it, you ought to buy it because chances are it ain’t going to be there next time. That’s the treasure-hunt aspect. We constantly buy that stuff and intentionally run out of it from time to time.”
Stock Update: $COST
$COST is currently trading at $731.92, which has decreased by 6.83% from its previous close of $785.59 due to the quarterly revenue missing analyst estimates. At the time of writing, the market cap is $324.862 billion, with a volume of 4,396,949.
Should you buy $COST?
The company’s second quarter and 24-week results were mixed, with revenue missing estimates. On a positive note, the EPS and net sales showed significant gains in the quarter. However, investors may have been reacting to Costco’s failure to raise membership fees, a huge source of its revenue. Even without raising the fees, Costco still grew its EPS.
Before today’s pullback, COST stock was up 60% in the past 52 weeks. When it finally decides to raise membership fees, it could positively impact the stock. Based on this assessment, the moderate buy rating for the stock by analysts accurately represents its future performance. As an investor, you should focus on the upcoming quarterly results to make the right decision.
Click Here for Updates on Costco – It’s 100% FREE to Sign Up for Text Message Notifications!
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.