Does Costco Deserve More Credit for Q1 Earnings?

By Chris Lange Updated Jan 30, 12:12PM EST · Published Dec 13, 9:45AM EST

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Does Costco Deserve More Credit for Q1 Earnings? — © YvanDube / Getty Images

When Costco Wholesale Corp. (NASDAQ: COST | COST Price Prediction) reported its fiscal first-quarter financial results after the markets closed on Thursday, the retailer said that it had $1.90 in earnings per share (EPS) and $37.04 billion in revenue. The consensus estimates had called for $1.71 in EPS and $37.25 billion in revenue. The same period of last year reportedly had $1.73 in EPS and $35.07 billion in revenue.

During the latest quarter, net sales increased 5.6% year over year while membership fees increased 6.1%.

Comparable sales increased 4.3% on a companywide basis, driven by: U.S. comparable sales increasing 4.7%; Canada comparable sales increasing 2.9%; other international comparable sales increasing 3.2%; and e-commerce comparable sales increased 5.5%.

On the conference call, Richard Galanti, Costco executive vice president, chief financial officer and director, commented:

In terms of Q1 comp sales metrics, first quarter traffic or shopping frequency increased 3.4% worldwide, and 3.1% in the U.S. This again includes the impact of the Thanksgiving holiday shift. Weakening foreign currencies relative to the U.S. dollar negatively impacted sales by approximately 30 basis points, and gasoline price deflation negatively impacted sales by approximately 40 basis points. Our average transaction or ticket was up 0.9% during the quarter, including the negative impacts of gas deflation, FX and the holiday shift.

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A few of the stronger departments in this quarter in terms of sales were home furnishings, domestics, tires and pharmacy.

Earlier this week, Costco launched its Japan e-commerce site, with its Australia site planned to open in the first half of calendar 2020.

Shares of Costco traded down nearly 2% early Friday to $291.66, in a 52-week range of $189.51 to $307.34. The consensus price target is $305.17.
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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.