On September 26^th Costco Wholesale Corporation (COST) posted results for Q4 and FY2023 ending September 3^rd. This big-box club chain serves as a bellwether for hybrid retail in-store and on-line spending and is a barometer of consumer confidence, offering groceries and household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

The Company beat consensus on both the bottom and top lines by 0.5 and 3.2 percent respectively. For the most recent quarter, the Company earned $2,160 million on revenue (including fuel and membership fees) of $78,939 million with a diluted EPS of $4.86. For the corresponding Q4 of FY2022, Costco earned $1,868 million on equivalent revenue of $72,091 million with a diluted EPS of $4.20.  Revenue was 9.5 percent higher than in Q4 of FY2022 and net earnings were up by 15.6 percent. Gross margin for Q24 FY2023 was 12.3 percent, higher than the corresponding Q4 of FY2022 at 11.8 percent percent. Concurrently operating margin was unchanged at 3.5 percent for both 4^th quarters despite increased freight, transport, wages and utilities.

For FY 2023, the Company earned $6,292 million on revenue (including fuel and membership fees) of $242,290 million with a diluted EPS of $14.16. For FY2022, Costco earned $5,844 million on equivalent revenue of $226,954 million with a diluted EPS of $13.14

Comparable global same-store sales for Q4 2023 (excluding fuel and foreign exchange) attained 3.8 percent. U.S. same store sales were up 3.1 percent; Canada by 7.4 percent and the Other International category, 4.4 percent. E-Commerce was down by 0.6 percent. According to CFO Richard Gallanti, on the investors’ call consumers made more trips to Costco with traffic up 5.0 percent but they spent less with the average transaction down 4.5 percent. According to Gallanti, customers selected groceries, household goods and clothing but avoided big-ticket items. Costco did not raise membership fees as expected but Gallanti commented this is a situation of “when and not if”. There are currently 32.3 million Executive Level memberships at $120 annually representing 45 percent of the total but accounting for 73 percent of sales.

On September 3^rd Costco posted total assets of $68,994 million. Long-term debt and lease obligations attained $10,353 million. Costco had an intraday market capitalization of $247,550 million on September 26^th. COST trades with a forward P/E of 36.5 and has ranged over the past fifty-two weeks from $447.90 to $571.16 with a 50-day moving average of $553.99. Costco closed pre-release at $552.96 on September 26^th but rose on a declining market attaining $561.74 at 13H00 on Wednesday 27^th. Twelve-month trailing operating margin was 3.5 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.9 percent and 27.3 percent on equity.

At the end of Q4 FY2023, Costco operated 861 warehouses. There are 591 in the U.S; 107 in  Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 62 others in seven other nations among the E.U., Asia and Australia.