Costco's Q1 2025: Shoppers Spend More at Home

Costco's first-quarter earnings surprised Wall Street with better-than-expected results, as shoppers spent more on jewelry, luggage, and furniture. The company's Chief Financial Officer, Gary Millerchip, noted that customers are being selective with their purchases but are willing to spend on unique, high-quality, and valuable items. The report showed that with inflation easing, people are cooking at home more, leading to increased sales in meat and produce. Interestingly, there's a split in spending habits among members, with some opting for premium cuts and others choosing more affordable options. Earnings per share reached $4. 04, beating the expected $3. 79. Revenue also surpassed expectations, coming in at $62. 15 billion compared to the anticipated $62. 08 billion. Costco's net income grew to $1. 80 billion, or $4. 04 per share, from $1. 59 billion in the year-ago period. Revenue increased significantly from $57. 80 billion a year ago. The membership-based club benefited from its reputation for providing better value on bulk items as households face higher food and housing costs. Membership fees also increased for the first time in seven years, with revenue reaching $1. 17 billion, up 8% year over year.

Comparable sales saw a 5. 2% increase globally and in the U. S. Customer traffic also rose, with a global increase of 5. 1% and 4. 9% in the U. S. Average ticket prices saw a slight rise, although this was impacted by gas price deflation and foreign exchange rates. Certain categories, like gold and jewelry, gift cards, and home furnishings, saw significant growth. Fresh produce and meats also did well, with some members buying high-end cuts while others opted for lower-cost options. Costco's private label, Kirkland Signature, is growing faster than the overall business, and the company has been able to reduce prices on some items. E-commerce sales rose 13% year over year, with Costco gaining market share in shipping big and bulky items. They hit nearly 1 million deliveries in the quarter. Membership renewal rates were 90. 4% globally. Costco opened seven new clubs during the quarter and plans to open 29 more this fiscal year, with 10 outside the U. S. As of the close of trading on Thursday, Costco's stock was up nearly 50% for the year, outpacing the S&P 500's 27% increase.

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