Costco beats quarterly sales, profit estimates on steady early holiday demand By Reuters

By Anania Mariam Rajesh

(Reuters) – Costco Wholesale beat first-quarter revenue and profit expectations on Thursday, as its bulk and discount offerings, appealing to budget-conscious U.S. shoppers, led to a surge in early holiday season sales for the membership-only retailer.

The company’s shares, which have risen 51% this year, were up nearly 1% in extended trading.

The retailer, which sells products in larger packages and has a bulk offering of items such as bread and eggs for as little as $3, has seen discerning consumers turn to its stores to shop for their holiday needs, including home furnishings and jewelry.

“Looks like you’ve seen more than bulk food sales growth.” So it looks like there’s been a little bit of an increase in other products, not necessarily high-priced discretionary items … but you’re seeing sales growth in some different aisles of the store,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which has a stake in at Costco (NASDAQ:).

The 2024 holiday shopping season is shorter than previous years, with just 26 days between Thanksgiving and Christmas. In season, retailers across the United States introduced discounts and promotions as early as October to beat the competition and attract discerning shoppers.

“Seasonal sales seem to be very strong … people are buying very basic this year, but there are good trends,” CFO Gary Millerchip said in a post-earnings call.

Costco launched pre-Black Friday sales in early November, trying to avoid a drop in sales in the first quarter ended Nov. 24 this year, from the late Thanksgiving weekend, which extended into December.

It offered deeply discounted products, such as the LG UltraGear Gaming Monitor for $179, $70 off the original price, and JBL Headphones for 30% off, at $69.99.

Bigger rival Walmart ( NISE: ), which also offers bigger discounts and promotions, raised its annual sales and profit forecast in November for the third time this year, signaling strong consumer spending.

Costco’s first-quarter revenue rose 7.5% to $62.15 billion, beating analysts’ estimates of $62.08 billion, according to data compiled by LSEG.

Its profit was $4.04 per share in the reported quarter, easily beating estimates of $3.79.

The recent increase in annual membership fees to $65 for Gold Star members and $130 for Executive members resulted in a 7.7% increase in fee earnings to $1.17 billion in the reporting quarter.