The third quarter ended better than expected for Costco, which beat Wall Street estimates despite issues related to fuel prices and tariffs.
Net income for the quarter was $2.19 billion, or $4.93 per diluted share, up from $1.9 billion, or $4.28 per diluted share, year over year, the company reported.
A third-quarter analyst consensus forecast published by Zacks Investment Research pegged earnings at $4.91 and revenue at $69.5 billion.
Comparable sales, excluding the effects of fuel prices and foreign exchange volatility, increased 6.6% for the company overall, with stores in the United States up 6.8%, Canada up 6.2%, and other international markets up 5.9%, Costco stated. On the same basis, digitally-enabled comps increased by 20.8%.
Net sales advanced to $69.15 billion from $61.96 billion in the year-before quarter, while total revenue was $70.53 billion versus $63.21 billion.
Ron Vachris, Costco president and CEO, said on a conference call that macroeconomic and political conditions affected the company’s results for the quarter. Higher gas prices drove record fuel sales volumes as consumers visited Costco locations, seeking value at the pump.
Vachris added, “We are closely monitoring the longer-term inflationary impact of higher oil prices, as well as the future impacts of tariffs. Our buyers continue to demonstrate their ability to adapt and are using their significant experience and expertise to help reduce the impact on prices for our members. Our goal is to be the first to lower prices and last to raise them.”
Costco continues to navigate tariff issues associated with International Emergency Economic Powers Act duties.
“On the topic of tariffs, we started submitting our refund claims for the IEEPA tariffs,” Vachris said. “We are doing this through the process set up through U.S. Customs and Border Protection. These submissions will go in over what may be the next few months and based on what other claimants have experienced, we should start receiving refunds on approved claims on a rolling basis over the following two to three months. As we mentioned before, our plan is to return to our members in some form the portion of tariffs that were passed on to them. How much we return and when depends on a variety of factors, including how much refund money we receive, and when it arrives, as well as developments in the lawsuit filed against the company regarding the return process.”
In the conference call, Gary Millerchip, Costco executive vice president and CFO, noted that third-quarter non-foods comp sales were up in the high single digits, led by gold and jewelry, small electrics, tires, home furnishings, majors and health and beauty. Fresh Foods sales were up in the high single digits while Food and Sundries sales were up in the mid-single digits. Millerchip added wellness products, which did well in the quarter, including small appliances offered in that assortment.
