Costco beats Q4 estimates with $95.7 billion of revenue and $6.75 EPS

Costco Wholesale's year-end release, out after Thursday's close, beat estimates on revenue and earnings. Shares were little changed in after-hours trading as of 4:52 p.m. Eastern.

The 16-week quarter ended August 30. Total revenue was $95.723 billion, above the $94.86 billion estimate Reuters reported, and compared with $86.156 billion a year earlier. Net sales were $93.873 billion, up 11.2%. Diluted earnings were $6.75 a share, against a Zacks consensus of $6.48 and $5.87 a year earlier. Net income was $2.998 billion.

That EPS figure includes a non-recurring $0.15 a share from IEEPA tariff refunds, import duties returned to Costco, less a partial reinvestment in member values. Strip the $0.15 out and the $6.60 that remains would still have cleared the $6.48 estimate. For the 52-week fiscal year, Costco reported $303.154 billion of total revenue and diluted EPS of $20.76, up from $18.21. It now operates 939 warehouses, 647 of them in the United States and Puerto Rico.

Comparable sales, with and without gasoline

Costco's own split is the cleanest read of the quarter. Reported comps include the pump and the dollar. The adjusted line takes both out.

Gasoline prices and foreign exchange supplied the extra 3.5 percentage points in the U.S. reported number. Canada's adjusted comps were 4.6%, 2.6 percentage points behind the United States.

Digitally enabled sales, Costco's measure of sales that run through its digital channels rather than a pure e-commerce figure, stayed near 20%. That digital rate is a step down from 21.7% in the second quarter and 20.8% in the third.

Companywide, the 6.7% adjusted comp sits on top of 6.4%, 6.7% and 6.6% in the first three quarters. The year did not accelerate. It also did not fade.

The comparison with the other big-box prints is directional only, because the calendars do not match. Walmart's latest U.S. comparable sales, excluding fuel, were 2.6% for the 13 weeks ended July 31. Target reported 3.8% comparable sales and 3.6% comparable traffic for the quarter ended August 1, with $1.65 of its $4.11 of EPS coming from a $994 million pretax tariff refund. Costco's $0.15 a share is a much smaller overlay.

Merchandise costs were $83.531 billion against $93.873 billion of net sales, a spread of about 11.0%, roughly a tenth of a point thinner than a year earlier.

Costco membership fees slowed in the fourth quarter

Fee growth slowed to 7.3% in the fourth quarter. Membership-fee income was $1.850 billion, up from $1.724 billion a year earlier. That follows 13.6% growth in the second quarter, to $1.355 billion, and 10.7% in the third, to $1.373 billion. For the full year, fees were $5.907 billion, up 11%.

That quarterly comparison is not the 2024 price increase showing up again. Costco raised U.S. and Canada Gold Star and Business annual fees from $60 to $65, and Executive fees from $120 to $130, effective September 1, 2024. By this fourth quarter, that increase is already in the year-ago numbers.

The last sourced census is from the third quarter, as of May 10: 82.9 million paid memberships, 41.2 million Executive memberships, a 92.2% U.S. and Canada renewal rate and 89.7% worldwide. Traffic, ticket size, paid-member counts and renewal rates for the fourth quarter are due on the call, scheduled for 5:00 p.m. Eastern.

Where the funds hold it

Costco is the second-largest holding in the Consumer Staples Select Sector SPDR ETF AXLP, which etf.net grades A, at 8.95% as of Thursday, behind only Walmart. That fund closed at $81.70, down 0.9%, in the regular session that ended before Costco reported. Vanguard's consumer staples fund BVDC, graded B, held Costco at 12.0% the same day. VanEck's retail ETF BRTH, also graded B, held it at 8.78%, behind Amazon and Walmart. Costco's after-hours bid-ask mid as of 4:52 p.m. Eastern was $895.30, 0.13% below the close. For holders of those funds, the print has done little so far.

Costco shares finished the regular session lower.

That close valued the company at $398 billion. The call has not started. Costco's investor calendar lists September sales results for October 7.