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Highlights
- Costco's recent Q4 earnings report showed strong earnings per share but only slight revenue growth, falling short of analyst expectations.
- The company opened new warehouses and is expanding its membership model, with anticipated benefits from a recent fee increase expected in the coming years.
- Market reactions were mixed, raising questions about Costco's ability to maintain growth momentum amidst lower-than-expected sales figures.
Costco Wholesale, a prominent player in the retail sector, recently released its Q4 earnings report, leading to a mixed reaction in the market. The company reported earnings of $5.29 per share, surpassing FactSet estimates of $5.08. In comparison, the same quarter last year saw earnings of $4.86 per share. However, revenue increased only slightly, rising 1% to $79.69 billion, which fell short of analyst expectations for $79.91 billion.
Membership fee revenue saw a modest increase to $1.51 billion, although this figure was below the anticipated $1.55 billion. Comparable sales rose by 5.4% for the quarter, just missing forecasts of 5.7% growth. Within the U.S., same-store sales increased by 5.3%, demonstrating a steady performance in a competitive retail environment.
During the quarter, Costco (NASDAQ: COST) opened 14 new warehouses, with ten located in the United States, indicating ongoing expansion efforts. CFO Gary Millerchip highlighted that the primary benefits from the recent membership fee increase, implemented on September 1, will likely materialize in the latter half of 2025 and into 2026. He noted that the growth trajectory for 2025 might not follow the usual pattern that analysts typically anticipate.
Market reactions to the earnings report reflected caution, as investors processed the mixed results and the implications for future growth. While the company has shown resilience in a challenging retail landscape, the lower-than-expected revenue figures and sales growth raised questions about its ability to maintain momentum.
As Costco navigates these dynamics, the focus will remain on its strategic expansion, pricing strategies, and overall performance in the retail sector. The company's future quarters will provide further insights into how it adapts to changing consumer behaviors and market conditions while seeking to capitalize on its membership model and warehouse growth.
