Costco’s latest earnings report shows double-digit growth in its e-commerce division and membership income.
Key Takeaways
- According to its latest quarterly earnings report, released Thursday, Costco surpassed analyst predictions for revenue.
- The wholesaler also saw growth in its membership income, which increased by 14% from the same time a year prior.
- One growth factor is the presence of younger shoppers in Costco’s aisles.
Costco is performing better than ever, posting strong financial results for its latest quarter. The wholesale giant is exceeding analyst expectations for revenue as it continues to attract members, especially younger shoppers.
Costco reported results on Thursday for the fourth quarter of its 2024 fiscal year, which ended on August 31. According to CNBC, revenue for the quarter increased by 8% year-over-year to $86.16 billion, surpassing analyst expectations of $86.06 billion.
Net income was $2.61 billion for the quarter, higher than $2.09 billion at the same time last year, and same-store sales (a metric that removes factors like store openings and closures) grew by 6.4% during the quarter.
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Remarkably, e-commerce sales for the year increased by 15% year-over-year to $19.6 billion, comprising 7% of Costco’s net sales for the year. Costco CEO Ron Vachris said on an earnings call on Thursday that the company is upgrading the search features on its website and app to make it easier for customers to shop online.
“We remain confident in our ability to grow market share by continuing to deliver exciting, high-quality items at the best value for our members,” Vachris said on the call.
Membership fee income also saw double-digit growth, increasing by about 14% year-over-year for the quarter to $1.72 billion. The jump represents a rise in paying shoppers, more members upgrading to higher-priced memberships and a higher annual fee. Costco raised its membership fee last year for the first time since 2017, increasing its annual Gold Star membership by $5, from $60 to $65, and its Executive Membership by $10, from $120 to $130.
Younger shoppers are also flocking to Costco. The company’s Chief Financial Officer, Gary Millerchip, told CNBC earlier this year that the average age of Costco members had decreased, and about half of its new members each year are under 40 years old. Last year, close to 137 million people globally paid for a Costco membership, with 47% opting for an Executive membership.
How Costco plans to improve the customer experience
Costco is opening new locations in response to demand. Vachris said on the earnings call that Costco has opened 27 new warehouses in the past quarter and plans to open an extra 35 stores in the new fiscal year.
Millerchip noted on the same call that foot traffic to stores and visits to Costco’s website increased by 3.7% during the quarter, while the size of the average transaction grew 2.6% globally.
Costco is planning to improve the shopping experience at stores by rolling out a new checkout technology that makes it easier for employees to scan items while the member is still in line.
“Upon reaching the cashier, nothing has to be removed from the cart; only payment is needed,” Vachris said on the call.
Related: Gold Prices Are Higher Than Ever. Here’s How Much a Costco Gold Bar Purchased in 2024 Is Worth Today.
On the digital storefront side, Costco has introduced a virtual waiting room on its website during high-traffic times for high-demand items, like Pokémon cards, he said. The company is also planning to introduce passwordless sign-in to its mobile app.
How extended hours are impacting Costco’s sales
Costco made a change earlier this year, announcing that higher-tier Executive members would have exclusive access to stores at earlier times in the day. By September, the wholesaler had extended its hours at all stores for Executive members, adding an hour in the morning from 9 a.m. to 10 a.m. on weekdays and Sundays and a half hour from 9 a.m. to 9:30 a.m. on Saturdays.
The extended hours have driven a 1% weekly sales lift in the U.S., Vachris said on the call on Thursday.
“This has been very well received by our members,” he said. “Since announcing these new executive benefits, we’ve seen a meaningful increase in upgrades from Gold Star members to Executive membership.”
Related: Costco’s Early Extended Hours Have Made It Easier to Shop at Peak Times, According to a New Report
Costco operates 914 warehouses throughout the world, including 629 in the U.S. and Puerto Rico, the company stated in its Thursday earnings report.
Key Takeaways
- According to its latest quarterly earnings report, released Thursday, Costco surpassed analyst predictions for revenue.
- The wholesaler also saw growth in its membership income, which increased by 14% from the same time a year prior.
- One growth factor is the presence of younger shoppers in Costco’s aisles.
Costco is performing better than ever, posting strong financial results for its latest quarter. The wholesale giant is exceeding analyst expectations for revenue as it continues to attract members, especially younger shoppers.
Costco reported results on Thursday for the fourth quarter of its 2024 fiscal year, which ended on August 31. According to CNBC, revenue for the quarter increased by 8% year-over-year to $86.16 billion, surpassing analyst expectations of $86.06 billion.
Net income was $2.61 billion for the quarter, higher than $2.09 billion at the same time last year, and same-store sales (a metric that removes factors like store openings and closures) grew by 6.4% during the quarter.
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