Costco's Q2 revenue fell short of expectations, saying "non-essential items are not selling well"

It is learned that on March 2, Costco released its second quarter performance report for fiscal year 2023 ending February 12, 2023. The company's revenue this quarter fell short of expectations as price-sensitive consumers drastically cut spending on non-essential items. After the financial report was issued, Costco's stock price fell by more than 3% in after-hours trading in the U.S. stock market.

The report showed that Costco's total revenue in the second quarter increased by 6.5% year-on-year to $55.27 billion, but was lower than analysts' general expectation of $55.54 billion. In the quarter ended February 12, the company's net profit increased to $1.47 billion, with basic and diluted earnings per share of $3.30, compared with $1.3 billion and $2.92 in the same period last year, respectively.

Costco membership fee revenue increased from US$967 million in the same period last year to US$1.03 billion. Costco's annual membership fee ranges from US$60 to US$120 (approximately NT$1,850 to NT$3,700), which is the main source of Costco's gross profit margin.

The company also released sales data for the first 24 weeks of fiscal 2023, which showed that net sales in the first 24 weeks increased by 7.3% year-on-year, from US$100.35 billion in the same period last year to US$107.68 billion. Among them, comparable sales in the United States increased by 7.5% during this period, Canada increased by 2.9%, and other regions increased by 0.4%.

"We've seen weakness in sales of higher-priced discretionary items," said Costco Chief Financial Officer Richard Galanti, adding that categories such as electronics, jewelry and housewares performed the worst in February and in the current quarter.

Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, said: "Costco's Q2 earnings report shows that its merchandise sales growth may not keep up with the growth rate of inflation and consumer traffic."

Editor ✎ Nicole/

Disclaimer: This article is copyrighted and may not be reproduced without permission.