Costco Wholesale (COST) -) shares moved higher in early Wednesday trading following the bulk retailer's stronger-than-expected fourth quarter earnings and solid membership sales.
Costco said diluted earnings for the three months ending on September 3, the company's fiscal third quarter, came in a $4.86 per share, up 15.7% from the same period last year and 7 cents ahead of the Street consensus forecast.
Group net sales, Costco said, rose 9.5% to $78.94 billion, again topping analysts' forecasts of a $77.9 billion tally. Membership fees rose 13.7% to $1.509 billion. The group's overall gross margin was up 0.42% to 10.6%.
Adjusted same-store sales were up 3.8% from last year, Costco said, well ahead of the Street forecast, while e-commerce sales were down 0.6%.
Average daily transaction were down 3.9% in the U.S., and 4.5% worldwide over the quarter, Costco said, thanks in part to "weakness in bigger ticket nonfood discretionary items, as well as the gas price deflation."
"Costco put up another solid quarter, with the key positive being better than expected gross margins," said D.A. Davidson analyst Michael Baker, who carries a 'neutral' rating with an improved $570 price target on the stock following last night's results.
"Some were expecting a few increases as it has been more than 6 years since the last ... this will come, and we think within the next 6 months, but we think Costco is cognizant of economic headwinds facing the consumer so is taking their time"
A softer-than-expected reading for September consumer confidence, while fell to a four-month low according to Conference Board data published Tuesday, may reflect the cautious tone adopted by Costco in their post-earnings call.
"It does matter," CFO Richard Galanti said when asked if a slowing economy would alter the group's aim to raise membership fees. "If we wait a little longer, so be it. And that's kind of how we feel right now."
Costco shares were marked 1.45% higher in early Wednesday trading to change hands at $560.64 each, extending the stock's six-month gain to around 14%.
