Costco added $15B to top line in fiscal 2023

Costco Wholesale got a lift to net sales and earnings in its 2023 fourth quarter and fiscal year thanks in part to an extra week for the reporting period, while comparable and e-commerce sales remained lackluster.

Still, Costco saw its overall revenue rise by more than $15 billion for fiscal 2023, and the Issaquah, Washington-based company’s Q4 and full-year earnings per share topped Wall Street’s projections.

In the 17-week quarter ended Sept. 3, net sales came in at $77.43 billion, up 9.4% from $70.76 billion in the 16-week period a year earlier, Costco reported Tuesday after the market close. The increase built on a 17.5% net sales jump in the fiscal 2022 quarter.

Total comparable sales in Q4 edged up 1.1% from a year ago and gained 3.8% excluding the impact of changes in gasoline pricing and foreign exchange rates, Costco said.

By region, comp sales in the quarter grew 0.2% in the United States ( 3.1% adjusted), 1.8% in Canada ( 7.4% adjusted) and 5.5% internationally ( 4.4% adjusted). A year ago, Costco reported that comp sales increased 13.7% (10.4% adjusted), including a gain of 15.5% in the U.S. ( 9.6% adjusted).

Fourth-quarter e-commerce sales dipped 0.8% (-0.6% excluding FX), marking the fourth straight quarter of declined online sales, including year-over-year decreases of 10% (-9% adjusted) in Q3, 9.6% (-8.7% adjusted) in Q2 and 3.7%(-2% adjusted) in the first quarter. Fiscal 2022 Q4 e-commerce sales had risen 7.1% ( 8.4% excluding FX).

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Membership fee income advanced 13.7% year over year to $1.51 billion in the fourth quarter, including the extra week. That compared with a 7.5% increase in the prior-year period

For the 53-week 2023 fiscal year, Costco’s net sales came in at $237.71 billion, up 6.7% from $222.73 billion in 52-week fiscal 2022, when the company posted a 16% gain.

Total revenue for fiscal 2023 was $242.29 billion, an increase of 6.8% from $226.95 billion in 2022. In dollars, Costco boosted its top line by $15.34 billion for 2023 after adding $31.03 billion in 2022. Membership fee income grew 8.4% to $4.58 billion in fiscal 2023.

Full-year comp sales for fiscal 2023 rose 3% overall ( 5.2% adjusted, excluding fuel and FX), reflecting upticks of 3.3% in the U.S. ( 4.2% adjusted), 1.7% in Canada ( 8.1% adjusted) and 2.8% internationally ( 7.6% adjusted). In fiscal 2022, Costco generated comp sales growth of 14.4% overall ( 10.6% adjusted), including a gain of 15.8% in the U.S. ( 10.4% adjusted).

Fiscal 2023 e-commerce sales were down by 5.7% (-4.8% excluding FX), compared with growth of 10.1% ( 10.4% excluding FX) on a comparable basis in 2022.

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At the bottom line, Costco’s 2023 fourth-quarter net income totaled $2.16 billion, or $4.86 per diluted share, compared with $1.87 billion, or $4.20 per diluted share, a year ago. Analysts, on average, had projected Q4 adjusted EPS of $4.79, with estimates ranging from a low of $4.41 to a high of $5.26, according to Refinitiv.

For the full 2023 fiscal year, net earnings were $6.29 billion, or $14.16 per diluted share, versus $5.84 billion, or $13.14 per diluted share, in 2022. Analysts’ consensus estimate was for adjusted EPS of $14.06, with projections running from a low of $13.70 to a high of $14.51, according to Refinitiv.

Costco currently operates 861 wholesale clubs, compared with 838 a year earlier. By market, the company has 591 clubs in the U.S. and Puerto Rico, 107 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France, and one apiece in Iceland, New Zealand and Sweden. Costco also runs e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

“Costco beat expectations on both revenue and EPS, while operating margin was in line with consensus [analyst estimates]. Inventories ended the quarter down 7% year over year, while sales grew 9% in 4Q. Notably, comps of 3.8% outpaced consensus of 3.4%,” Jefferies analyst Corey Tarlowe wrote in a research note late Tuesday. “For the fiscal year, Costco’s sales of $238 billion were up 7%, membership fee incomre of $4.6 billion was up 2% and adjusted EPS of $14.69 was up 11% year over year. Additionally, Costco currently operates 861 warehouses, and we think the company is well-positioned to gain share in the current environment.”

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