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Costco Wholesale Corporation (COST - Free Report) came up with first-quarter fiscal 2023 results, wherein the top and bottom lines missed the Zacks Consensus Estimate but improved year over year. Comparable sales increased but at a decelerating rate. The company’s e-commerce sales declined during the quarter.
Q1 Earnings & Sales Picture
Costco posted first-quarter adjusted earnings of $3.10 per share, which fell short of the Zacks Consensus Estimate of $3.14. However, the bottom line increased from the earnings of $2.97 per share reported in the year-ago period.
Total revenues, which include net sales and membership fees, were $54,437 million, up 8.1% from the prior-year quarter. However, the metric missed the Zacks Consensus Estimate of $54,668 million.
In the reported quarter, the company’s comparable e-commerce sales fell 3.7% year over year. Excluding the impact of gasoline prices and foreign exchange, the same declined 2% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco’s net sales grew 8.1% year over year to $53,437 million, while membership fees increased 5.7% to $1,000 million in the reported quarter. Costco’s growth strategies, improved price management and decent membership trends have been contributing to its performance.
Comparable sales climbed 6.6% from the prior-year quarter, following an increase of 13.7% in the preceding quarter. The metric reflects an improvement of 9.3% and 2.4% in the United States and Canada, respectively, and a decline of 3.1% in Other International locations.
We note that traffic or shopping frequency rose 3.9% globally and 2.2% in the United States. The average transaction or ticket was up 2.6% globally and 6.9% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 7.1% in the quarter. The United States, Canada and Other International locations registered comparable sales increases of 6.5%, 8.3% and 9.1%, respectively.
The operating income in the quarter increased 3.4% year over year to $1,751 million. Meanwhile, the operating margin (as a percentage of total revenues) contracted 20 basis points to 3.2%.
Store Update
Costco currently operates 847 warehouses — 583 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, two each in France and China and one each in Iceland, New Zealand and Sweden.
In the first quarter, Costco opened seven net new warehouses. Further, the company plans to open three in the second quarter, four in the third quarter and 10 in the fourth quarter.
In fiscal 2023, the company plans to open 27 new warehouses, including three relocations. These will lead to net 24 new warehouses, which consist of 15 in the United States and nine in Other International, including the third and fourth locations in China.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $10,856 million and long-term debt (excluding the current portion) of $6,472 million. Shareholders’ equity was $21,471 million, excluding non-controlling interests of $5 million.
Management incurred capital expenditures of $1.06 billion in the first quarter. The company anticipates capital expenditures for fiscal 2023 in the band of $3.8 billion-$4 billion.
Shares of this Zacks Rank #3 (Hold) company have increased 3.9% in the past six months compared with the industry’s rise of 10.8%.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial year sales suggests growth of 15.2% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.
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Costco's (COST) Q1 Earnings Miss, Comparable Sales Rise Y/Y
Costco Wholesale Corporation (COST - Free Report) came up with first-quarter fiscal 2023 results, wherein the top and bottom lines missed the Zacks Consensus Estimate but improved year over year. Comparable sales increased but at a decelerating rate. The company’s e-commerce sales declined during the quarter.
Q1 Earnings & Sales Picture
Costco posted first-quarter adjusted earnings of $3.10 per share, which fell short of the Zacks Consensus Estimate of $3.14. However, the bottom line increased from the earnings of $2.97 per share reported in the year-ago period.
Total revenues, which include net sales and membership fees, were $54,437 million, up 8.1% from the prior-year quarter. However, the metric missed the Zacks Consensus Estimate of $54,668 million.
In the reported quarter, the company’s comparable e-commerce sales fell 3.7% year over year. Excluding the impact of gasoline prices and foreign exchange, the same declined 2% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Delving Deeper
Costco’s net sales grew 8.1% year over year to $53,437 million, while membership fees increased 5.7% to $1,000 million in the reported quarter. Costco’s growth strategies, improved price management and decent membership trends have been contributing to its performance.
Comparable sales climbed 6.6% from the prior-year quarter, following an increase of 13.7% in the preceding quarter. The metric reflects an improvement of 9.3% and 2.4% in the United States and Canada, respectively, and a decline of 3.1% in Other International locations.
We note that traffic or shopping frequency rose 3.9% globally and 2.2% in the United States. The average transaction or ticket was up 2.6% globally and 6.9% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 7.1% in the quarter. The United States, Canada and Other International locations registered comparable sales increases of 6.5%, 8.3% and 9.1%, respectively.
The operating income in the quarter increased 3.4% year over year to $1,751 million. Meanwhile, the operating margin (as a percentage of total revenues) contracted 20 basis points to 3.2%.
Store Update
Costco currently operates 847 warehouses — 583 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, two each in France and China and one each in Iceland, New Zealand and Sweden.
In the first quarter, Costco opened seven net new warehouses. Further, the company plans to open three in the second quarter, four in the third quarter and 10 in the fourth quarter.
In fiscal 2023, the company plans to open 27 new warehouses, including three relocations. These will lead to net 24 new warehouses, which consist of 15 in the United States and nine in Other International, including the third and fourth locations in China.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $10,856 million and long-term debt (excluding the current portion) of $6,472 million. Shareholders’ equity was $21,471 million, excluding non-controlling interests of $5 million.
Management incurred capital expenditures of $1.06 billion in the first quarter. The company anticipates capital expenditures for fiscal 2023 in the band of $3.8 billion-$4 billion.
Shares of this Zacks Rank #3 (Hold) company have increased 3.9% in the past six months compared with the industry’s rise of 10.8%.
3 Picks You Can’t Miss Out On
Here we have highlighted three better-ranked stocks, namely Crocs (CROX - Free Report) , Arhaus (ARHS - Free Report) and Ulta Beauty (ULTA - Free Report) .
Crocs, a leader in innovative casual footwear for women, men and children, carries a Zacks Rank #2 (Buy). CROX has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Arhaus, a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Ulta Beauty currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 13.8%.
The Zacks Consensus Estimate for Ulta Beauty’s current financial year sales suggests growth of 15.2% from the year-ago period. This beauty retailer and the premier beauty destination for cosmetics, fragrance, skincare products, hair care products and salon services has a trailing four-quarter earnings surprise of 26.2%, on average.