Costco Misses Wall Street Revenue Expectations Despite Strong E-commerce Gains, Shares Fall

Today, Costco fell short of the revenue forecast set by Wall Street for the holiday quarter of 2024, despite registering an increase in year-over-year sales and experiencing substantial e-commerce growth. Following this development, the retailer witnessed a 4% drop in its stock during aftermarket trading, even though it had reached a 52-week high earlier in the day.

Financial Performance

For the fiscal second quarter of 2024, Costco reported earnings per share of $3.92, surpassing the anticipated $3.62. However, its revenue stood at $58.44 billion, missing the expected $59.16 billion. During the three-month period ending on February 18, the company's net income climbed to $1.74 billion, equivalent to $3.92 per share. This figure represents a significant rise from the $1.47 billion, or $3.30 per share, recorded in the corresponding period the previous year. Moreover, Costco's revenue for the quarter saw a boost from $55.27 billion in the year-ago quarter.

Sales Performance

Comparable sales for Costco showed a 5.6% year-over-year increase, with a 4.3% growth in the U.S. When excluding changes in gas prices and foreign currency, the metric soared 5.8% overall and 4.8% in the U.S. Additionally, e-commerce sales surged by 18.4% in the quarter compared to the previous year. This growth was attributed to a greater number of shoppers visiting Costco, resulting in a 5.3% increase in global traffic and a 4.3% rise in the U.S. Furthermore, the average shopping ticket increased both in the U.S. and globally.

Operational Expansion

Costco currently operates 875 warehouses, including 603 in the U.S. and Puerto Rico. Additionally, it has establishments in approximately twelve other countries, such as Canada, Mexico, Japan, and China. Notably, during the second quarter, Costco launched four new clubs, three of which were in the U.S. and one in Shenzhen, China. This marked the opening of the company's sixth club in China. Furthermore, two of the new U.S. locations were Costco Business Centers, tailored specifically for small business owners such as restaurant operators.

Market Performance

Concluding the day's trading, Costco shares closed at $785.59, following a peak of $787.08, ultimately propelling the company's market value to nearly $350 billion. Notwithstanding the missed revenue expectations, the stock has climbed by almost 19% since the beginning of the year.