[Note: Costco’s fiscal year ends in August]
Costco (NASDAQ: COST) is scheduled to report its fiscal fourth-quarter results on Tuesday, September 26. We expect Costco stock to likely see little movement due to revenue slightly beating expectations and earnings coming in line. It is worth pointing out that despite the pandemic and inflation, the business has managed to grow. Consumers loaded up on essentials in high quantities to keep costs low. Costco stands out from other retailers as it makes a majority of its profits from its membership income, so comparable sales growth isn’t as important for it as it is for other retailers. In Q3, membership fee income was 6% higher than the prior-year period. Card members increased by 7% over last year in the third quarter and the renewal rate remained strong, at 92.6% in the U.S. and Canada. This high renewal rate not only ensures a steady stream of revenue from membership fees but also increases the lifetime value of each customer. We need to keep an eye on this metric when calculating Costco’s long-term growth potential. Also, Costco currently boasts nearly $14 billion in cash, cash equivalents, and short-term investments. Its long-term debt is only $6.5 billion, so Costco has a net cash position on its balance sheet. That said, the retailer’s consistent performance at driving revenue coupled with its dedication to enhancing customer experience, reflects its ability to thrive in the ever-changing retail landscape.
Support authors and subscribe to content
This is premium stuff. Subscribe to read the entire article.