(Reuters) -Costco Wholesale beat first-quarter revenue and profit expectations on Thursday as its bulk and discounted offerings, appealing to budget-conscious American shoppers, drove early holiday-season sales growth for the membership-only retailer.
The company’s shares, which are up 51% so far this year, rose nearly 1% in extended trading.
The retail chain, which sells products in larger packs and has bulk offers on items such as bread and eggs for as low as $3, has seen picky consumers turn to its stores to shop for their holiday needs, including home furnishings and jewelry.
“It seems like you saw more than just bulk food sales growing. So it looks like there was a little bit of an uptick in other goods, not necessarily big-ticket discretionary items… but you’re seeing some sales growth in some different aisles of the store,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which has a stake in Costco (NASDAQ:COST).
The holiday shopping season is shorter in 2024 than previous years, with only 26 days between Thanksgiving and Christmas. The season saw retailers across the United States roll out discounts and promotions as early as October to beat competition and attract finicky customers.
“Seasonal sell-through appears to be very strong… people are very basic buying this year, but good trends,” CFO Gary Millerchip said in a post-earnings call.
Costco ran pre-Black Friday sales in early November, trying to dodge a hit to sales in the first quarter ended Nov. 24 this year, from the late Thanksgiving weekend, which extended into December.
It has offered products at heavy discounts, such as an LG UltraGear Gaming Monitor for $179, $70 lower than its original price, and JBL headphones for a 30% discount, at $69.99.
Bigger rival Walmart (NYSE:WMT), which has also been offering higher discounts and promotions, raised its annual sales and profit forecast in November for the third time this year, signaling strong consumer spending.
Costco’s first-quarter revenue rose 7.5% to $62.15 billion, beating analysts’ estimate of $62.08 billion, according to data compiled by LSEG.
Its profit came in at $4.04 per share in the reported quarter, handily topping an estimate of $3.79.
The recent hike in its annual membership fee to $65 for Gold Star members and $130 for Executive members resulted in earnings from the fees rising 7.7% to $1.17 billion in the reported quarter.
