On Thursday, Costco Wholesale Corporation reported low second-quarter fiscal year 2023 revenue as shoppers spent less on discretionary items.
Its stock price increased by 1.47% to $485.69 per share on March 02. However, it is anticipated to drop by -2.51% to $473.50 apiece in the upcoming session.
The earnings per share of Costco jumped to $3.30, beating the analysts’ $3.21 forecasts. As a result, the reading is higher than the former $3.07 data.
On the other hand, its revenue fell to $54.24 billion, missing the $55.55 billion estimates. Therefore, it is lower than the prior $54.40 billion results.
Moreover, the net income of Costco rose to $1.47 billion or $3.30 a share. It is better than the $1.30 billion or $2.92 per share last year.
Furthermore, membership growth remained solid since the retailer ended the second quarter with 68.10 million paid household members. Also, it gathered 123.00 million cardholders and 30.60 million paid executive memberships.
In addition, the quarterly income from memberships rose to $1.03 billion, exceeding the $967.00 million figures from the previous year.
Meanwhile, major US big-box retailers are witnessing a weaker demand for discretionary items like electronics, toys, and home goods. Besides, customers are pushed to spend more on affordable needs-based consumable goods as interest rates hike and food prices surge.
Customers Drawn to Costco by Meeting Food Demand
On March 02, Costco shared how its fresh food assortment attracted members despite consumers holding back from nonessential expenses. Additionally, the entity is reeling in shoppers amid inflation by meeting the demand for less expensive restaurant alternatives.
According to CEO Rodney McMullen, customers are finding more ways to spend their budget wisely. More consumers lean toward affordable meal solutions, which restaurants cannot offer.
For instance, the rotisserie chicken in Costco costs $4.99. CFO Richard Galanti noted that they invest in cheap costs to drive membership and pull in sales.
Also, based on analysts, 37.00% of consumers purchase food when grocery shopping. It is above the 30.00% data gathered in a survey in November 2021.
