Costco Reports Strong Q3 FY2025 Results with Increased Sales and Membership
Costco Wholesale Corporation (COST) announced its third-quarter fiscal 2025 results, exceeding both revenue and earnings expectations while showing year-over-year growth. The company also experienced solid comparable sales growth for the quarter.
Costco’s Quarterly Performance Overview
Costco posted earnings of $4.28 per share, surpassing the Zacks Consensus Estimate of $4.25 and up from $3.78 in the same quarter last year. Total revenues reached $63.205 billion, an 8% increase from the previous year, also exceeding the Zacks Consensus Estimate of $63.141 billion.
Comparable sales grew 5.7% year over year, surpassing the projected 4.7%. In the U.S., comparable sales rose by 6.6%, while Canada and other international markets grew by 2.9% and 3.2%, respectively.
Costco’s strategic investments and focus on customer satisfaction have strengthened market share and revenue growth. The company reported a membership renewal rate of 90.2%, reflecting strong customer loyalty.
Costco Wholesale Corporation Price, Consensus, and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Membership Growth and Improved Margins at Costco
Net sales increased by 8% to $61.965 billion, while membership fees rose 10.4% to $1.24 billion. The total membership reached 79.6 million households, a 6.8% year-over-year increase. Total cardholders rose to 142.8 million, a 6.6% growth.
Global traffic improved by 5.2%, and in the U.S., it increased by 5.5%. Average transaction sizes grew 0.4% globally and 1.1% in the U.S. Comparable sales also rose by 8% when excluding gasoline prices and foreign exchange impacts, with U.S. comparable sales growing by 7.9%.
E-commerce sales surged, with a 14.8% year-over-year increase, or 15.7% adjusted for gasoline prices and currency fluctuations. Gross margin expanded by 41 basis points to 11.3%. Operating income rose by 15.2% to $2.53 billion, and operating margin improved by 20 basis points to 4%, favorable compared to earlier projections.
Costco’s Store Operations and Expansion Plans
As of now, Costco operates 905 warehouses, including 624 in the U.S. and Puerto Rico. In the last quarter, the company opened nine new locations, including one relocation in Melbourne, Australia, and seven in the U.S. For fiscal 2025, Costco plans to open 27 warehouses, including three relocations.
Financial Health Snapshot of Costco
At the end of the quarter, Costco reported $13.836 billion in cash and equivalents and $5.717 billion in long-term debt. Shareholders’ equity stood at $27.125 billion, with capital expenditures around $1.13 billion for the quarter. The projected capital expenditures for fiscal 2025 exceed $5 billion.
Costco shares have increased by 10.1% year to date, outperforming the industry’s 4.5% gain.
Other Stocks to Consider
Sprouts Farmers (SFM) holds a Zacks Rank #1 (Strong Buy) and reports an average earnings surprise of 16.5%. The consensus estimate indicates a 13.7% increase in sales and a 35.5% rise in earnings year-over-year.
Nomad Foods Limited (NOMD), Europe’s leading frozen food company and also a Zacks Rank #1, shows a trailing earnings surprise of 3.2%. Its sales and earnings estimates predict growth of 4.6% and 7.3% year-over-year, respectively.
Grocery Outlet (GO), ranked #2 by Zacks, reports a trailing earnings surprise of 25.7% and an expected sales growth of around 7.9% year-over-year.
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
