On May 30^th Costco Wholesale Corporation (COST) posted results for Q3 FY 2024 ending May 12^th 2024. The Company exceeded the consensus for earnings by 2.2 percent but was light on sales exceeding estimates by 0.7 percent. COSTCO as the leading club chain serves as a bellwether for omni-channel warehouse in-store and on-line buying. The Company is a barometer of consumer confidence, offering groceries, clothing, household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

For the most recent quarter, the Company earned $1,681 million on revenue (including fuel and membership fees) of $58,516 million with a diluted EPS of $3.78. For the corresponding Q3 of FY 2023 ending May 7^th, Costco earned $1,302 million on equivalent revenue of $53,648 million with a diluted EPS of $2.95.  Revenue was 9.1 percent higher than in Q3 FY 2023 and net earnings were up by 29.1 percent. Gross margin for Q3 FY 2024 was 10.8 percent, compared to 10.3 for the corresponding quarter in FY 2023. Operating income attained 3.8 percent up from 3.1 percent in Q3 FY 2023, despite increased freight, transport, wages and utilities.

Comparable global same-store sales for Q3 2024 (excluding fuel and foreign exchange) rose to 5.8 percent. U.S. same store sales were up 6.0 percent; Canada by 7.4 percent and the Other International category, 8.5 percent. E-Commerce was up by 20.7 percent. Traffic was higher by 8.9 percent compared with the corresponding Q3 FY 2023.

Costco did not raise membership fees as expected but in the Q4 2023 investors’ call, the Company commented this is a situation of “when and not if”. At the end of FY 2023 there were 33.9 million Executive Level memberships at $120 annually representing 46 percent of the total but accounting for 73 percent of sales.

On May 12 Costco posted total assets of $67,911 million. Long-term debt and lease obligations attained $10,779 million. Costco had an intraday market capitalization of $358,000 million on May 30^th. COST trades with a forward P/E of 46.5 and has ranged over the past fifty-two weeks from $502.10 to $819.50 with a 50-day moving average of $745.79. Costco closed pre-release at $816.34 on May 30^th but fell in after-hours trading, post-release by 1.7 percent to $801.16. Twelve-month trailing operating margin was 3.5 percent and profit margin 2.7 percent.  The Company generated a return on assets of 8.4 percent and 31.2 percent on equity.

At the end of the recent completed quarter, Costco operated 878 warehouses. There are 605 in the U.S; 108 in Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 63 others in seven other nations among the E.U., Asia and Australia. This was a net increase of three warehouses during Q3.