What You Need To Know Ahead of Costco's Earnings Report

By
Nathan Reiff
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Updated March 07, 2024
Costco

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Key Takeaways

  • Costco reports second-quarter fiscal 2024 earnings after markets close Thursday.
  • A strong holiday shopping season—with net sales 10% higher than the previous year—could help drive top- and bottom-line growth, according to analysts.
  • The retailer is expected to post net income of $1.62 billion, up 10% compared with the prior-year quarter.
  • Costco's memberships are expected to have climbed to 72.8 million amid the company's efforts to crack down on membership sharing.

Following a strong holiday sales period, Costco Wholesale Corp. (COST) is expected to report solid revenue and profit growth when it releases its fiscal second-quarter earnings report on Thursday.

Analysts expect Costco's net income to reach $1.62 billion for the quarter, versus $1.47 billion a year earlier, according to estimates compiled by Visible Alpha. Earnings per share (EPS) is expected at $3.62, compared with $3.30 last year. Analysts peg net sales at $57.92 billion, a 6.8% increase over the year-earlier period.

Costco has already posted sales results for December and January and will include February sales in its upcoming earnings report. In December, the company reported net sales of $26.2 billion, an increase of 10% relative to the prior year, amid a busy holiday shopping period. January net sales of $22.1 billion were an improvement of 5% YOY.

Costco Key Stats
Analysts' Estimate for Q2 FY 2024 Q1 FY 2024 Q2 FY 2023
Net Income $1.62 billion $1.59 billion $1.47 billion
Earnings Per Share $3.62 $3.58 $3.30
Revenue (Net Sales) $57.92 billion $56.72 billion $54.24 billion

The Key Metric: Memberships

Essential to Costco's continued fiscal growth is its membership fee model. The company charges fees to members at multiple tiers in order to access its warehouses and ecommerce offerings. Costco has strong brand loyalty among members, with a 92.7% renewal rate in the U.S. and Canada in 2023. However, last year the company said that widespread sharing of memberships with non-members threatened to erode the company's profits and that it would crack down on sharing going forward. In January, Costco began to require customers at some stores to scan their member cards for access to the building.

Investors may thus want to keep an eye on how shifts in Costco's policies regarding member access may have affected its membership figures. Analysts expect that memberships will continue to grow at a solid rate. The company is expected to report 72.8 million members in its upcoming earnings report, compared with 68.1 million a year ago.

Business Spotlight: Finance Chief Stepping Down

Richard Galanti, Costco's finance chief since 1985, announced plans last month to step down. Gary Millerchip, former CFO for Kroger Co. (KR), will become Costco's new finance leader March 15, with Galanti continuing to advise through early 2025.

Besides overseeing Costco's massive financial growth over a period of roughly four decades, Galanti has been the primary liaison between the company and investors throughout that period. Investors have speculated as to whether the company will continue to release monthly sales reports and similar data following Galanti's departure.

UPDATE—March 7, 2024: This article has been updated to include the latest consensus analysts' estimate for net sales.

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Article Sources
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  1. Costco Wholesale Corp. "Q2 2024 Earnings and February Sales Results."

  2. Visible Alpha. "Financial Data."

  3. Costco Wholesale Corp. "Costco Wholesale Corporation Reports December Sales Results."

  4. Costco Wholesale Corp. "Costco Wholesale Corporation Reports January Sales Results."

  5. Costco Wholesale Corp. "Form 10-K for the fiscal year ended September 3, 2023," Page 6.

  6. Gizmodo. "Costco Puts a Stop to Sharing Membership Cards."

  7. ABC News. "Costco is testing out a new system for entering stores to crack down on card sharing."

  8. Wall Street Journal. "Costco’s Longtime Finance Chief and Its ‘Voice to Wall Street’ Is Stepping Down."

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