Costco reported earnings for the company’s fiscal second quarter that delivered mixed results that mostly beat expectations.
Costco’s net sales for the quarter jumped to $54.24 billion – a 6.5% increase that beat estimates of $55.5 billion. Earnings per share were $3.30 per share for the quarter ended Feb. 12, up from $2.92 per share for a comparable period ended a year ago.
CEO Craig Jelinek spoke on the earnings call and said there were some signs of “weakness in big-ticket discretionary products” in product categories such as apparel, electronics and jewelry.
CUSTOMERS CAN’T BELIEVE WHAT COSTCO IS CHARGING FOR THIS NEW FOOD COURT ITEM
These areas have been a major source of strength over the past two years, but have softened amid continued inflation. For example, Jelinek noted that the number of televisions sold has been relatively stable, although average selling prices have declined.
This was offset by sales growth in Costco’s fresh food, grocery and miscellaneous (eg miscellaneous) categories.
“People are spending their dollars where they think they should be,” Jelinek told investors on the call. Jelinek noted that average transactions and frequency of visits increased at the members-only retailer.
NEW COSTCO MEMBERS MAY RECEIVE A DISCOUNT
Membership revenue increased from $967 million to $1.027 billion from a year ago. Jelinek said renewal rates for its members in the US, Canada and worldwide were at an all-time high.
He also noted that Costco saw a roughly 1.5 percent increase in food sales for its private label, Kirkland Brands. This rate is typically around 0.5% for Kirkland Brands penetration in this category.
“People want to save money and it’s our brand, that’s great and it builds loyalty,” Jelinek said.
GET THE FOX BUSINESS ON THE GO BY CLICKING HERE
|COST||COSTCO WHOLESALE CORP.||485.69||+7.02||+1.47%|
Reuters contributed to this report.