Costco Wholesale Corp Fiscal 1Q24: Net Sales +6.1%, U.S. Comps (Ex Gas) +2%

Dec 19, 2023 | Corporate Insights, No Bull Economics

Costco reported that discretionary merchandise trends are improving, helped by inflation during the quarter which was flat to +1% (someone please tell the Fed!). Notably, some deflationary items declined -20% to -30% during the quarter and deflation was more apparent in some big & bulky items like furniture sets due to lower freight costs.  

Key Points

  • U.S. comps (excluding gas) increased +2% y/y, reflecting a +3.6% traffic increase offset by a -1.6% decline in average ticket. Gas price deflation negatively impacted sales by -0.6%.
  • Sales of e-gift cards, pet items, & snack items increased mid-teens. Appliance sales were up mid-20s with TVs up high singles (benefitting from lower prices) & tires were up in the low teens. Costco’s appliance & TV sales growth was notable given negative industry sales trends.
  • Costco sold $100MM+ of gold during the quarter & a Babe Ruth autographed index card for $20k.
  • A +6.1% increase in e-commerce sales was driven by strength in fresh foods and food/sundries to a lesser extent. Site traffic increased +10% with a +2.5% increase in average order value.
  • Both nonfood & e-commerce sales improved over September, October & November.
  • Paid household membership grew +7.6% y/y to 72MM during the quarter. 33.2MM paid Executive members at the end of the quarter represented a sequential increase of 939k relative to the previous quarter. Executive members now represent 46%+ of total paid members & 73%+ of worldwide sales.
  • The addition of younger members is generally in line with Costco’s historical trends & management noted that consumers don’t begin to spend more money until they reach the 40- to 55-year-old sweet spot.
  • App downloads increased +10% y/y to 30.5MM after increasing +40% y/y during FY23.
  • During FY23, 160 Costco locations generated sales of $300MM – $400MM, 25 exceeded $400MM with a few over $600MM. The company seeks to build new stores in existing markets close to those generating over $300MM.
  • New build costs have increased to $45MM to $50MM over the last 10 years from $30MM to $35MM.

Costco 1QFY24 Financials

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