Costco dips as same-store sales miss estimates; Goldman remains positive on stock

(Updated - September 27, 2023 5:43 AM EDT)

Investing -- Costco reported Tuesday fourth-quarter results that beat Wall Street estimates on both the top and bottom lines.

Costco Wholesale Corp (NASDAQ: COST) fell 2% in pre-market Wednesday trading.

Costco Wholesale reported fiscal Q4 earnings of $4.86 a diluted share on revenue of $78.94 billion, compared with estimates for $4.78 and revenue of $77.72 billion.

Comparable sales, including gas and currency changes, increased 1.1%. Excluding gas and currency changes, same-store sales rose 3.8%, just below the expected 3.9%.

Sales in the U.S. and Canada were up 0.2% and 1.8% respectively, while international was up 5.5% in the quarter. E-commerce adjusted sales were down 0.6% in the quarter.

Membership fees rose $1.51B, up from $1.34B in the same period last year. Speaking on the earnings call, the management said that the decision to increase membership fees hasn't been made yet.

"The stock is off a bit in the pre-market, we think for two reasons. First, some were expecting a few increases as it has been more than 6 years since the last one (June 2017). This will come, and we think within the next 6 months. But, we think COST is cognizant of economic headwinds facing the consumer, so is taking their time. Secondly, EBIT results were below estimates due to higher than expected costs, which offset the higher gross margin," DA Davidson analyst Michael Baker wrote in a client note.

On another hand, Goldman Sachs analyst Kate McShane remains bullish on COST.

"We continue to have confidence in COST's value proposition resonating with consumers, while the company's scale and limited SKU model should enable it to manage cost pressures. We reiterate our Buy rating."

By Senad Karaahmetovic

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