Costco Wholesale Corporation COST posted second-quarter fiscal 2025 results, with the top line surpassing the Zacks Consensus Estimate while the bottom line missing the same. Both metrics showed year-over-year growth. The company also registered decent comparable sales growth during the quarter. 

Costco’s Quarterly Performance: Key Metrics and Insights

Costco reported adjusted earnings of $4.02 per share for the quarter under review, which missed the Zacks Consensus Estimate of $4.09. The metric increased 8.4% from $3.71 in the prior-year period.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote

Total revenues, comprising net sales and membership fees, reached $63,723 million, marking a 9% increase from the year-ago quarter. The metric also beat the Zacks Consensus Estimate of $63,224 million.

Costco’s comparable sales rose 6.8% year over year in the quarter, surpassing our 4.3% estimate. Comparable sales in the United States grew 8.3%, while Canada and Other International markets saw increases of 4.6% and 1.7%, respectively.

Costco’s strategic investments, customer-centric approach and merchandise initiatives, along with an emphasis on membership growth, have helped it capture market share and maintain steady revenue growth. By prioritizing value and quality, the company has built strong customer loyalty, leading to an impressive membership renewal rate of 90.5% in the quarter.

Costco Achieves Membership Growth and Improved Margins

Costco's net sales rose 9.1% year over year to $62,530 million, while membership fees increased 7.4% to $1,193 million in the reported quarter. The company ended the quarter with 78.4 million paid household members, up 6.8% from the prior year. The number of total cardholders grew 6.6% to reach 140.6 million.

Traffic or shopping frequency improved 5.7% globally and 5.6% in the United States, while the average transaction or ticket grew 1% worldwide and 2.6% in the United States.

Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 9.1%. In the United States, comparable sales increased 8.6%, while Canada and Other International markets saw gains of 10.5% and 10.3%, respectively. 

Costco’s e-commerce performance was strong, with comparable sales rising 20.9% year over year, or 22.2% after excluding the impact of gasoline prices and currency fluctuations.

The gross margin expanded 5 basis points year over year to 10.9%, which came in line with our estimate. The operating income grew 12.3% to $2,316 million, while the operating margin improved 10 basis points to 3.6%, falling short of our anticipated 20 basis-point expansion.

Costco's Store Updates and Expansion Plans

Costco currently operates 897 warehouses. These include 617 in the United States and Puerto Rico, 109 in Canada, 41 in Mexico, 36 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France and one each in Iceland, New Zealand and Sweden.

During the quarter under discussion, Costco opened one warehouse. For fiscal 2025, management plans to open 28 warehouses, including three relocations.

Costco’s Financial Health Snapshot

Costco ended the reported quarter with cash and cash equivalents of $12,356 million and long-term debt (excluding the current portion) of $5,755 million. Shareholders’ equity was $25,577 million. Management incurred capital expenditures of roughly $1.14 billion in the quarter. Costco foresees capital expenditures of about $5 billion for fiscal 2025.

Shares of this Zacks Rank #2 (Buy) company have gained 3.9% in the past three months against the industry’s decline of 1.1%.

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Other Stocks to Consider

Sprouts Farmers SFM, which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of 12.1% and 22.4%, respectively, from the year-ago reported numbers. SFM delivered a trailing four-quarter earnings surprise of 15.1%, on average.

Farmer Bros. Co. FARM engages in the roasting, wholesale, equipment servicing and distribution of coffee, tea and other allied products in the United States. It currently holds a Zacks Rank #2. FARM delivered a trailing four-quarter earnings surprise of 35%, on average.

The Zacks Consensus Estimate for Farmer Bros.’ current financial-year sales and earnings implies growth of 3.3% and 25%, respectively, from the year-ago period’s reported figure.

Post Holdings, Inc. POST operates as a consumer-packaged goods holding company in the United States and internationally. It currently carries a Zacks Rank #2. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average.

The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the prior-year reported levels.

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Costco Wholesale Corporation (COST) : Free Stock Analysis Report

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