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ISSAQUAH, Wash. — Costco Wholesale Corp. exceeded Wall Street’s expectations in posting quarterly financial results that featured continued growth but at a slower pace.
Members made more trips to the warehouse clubs but spent less. Shoppers shunned bigger-ticket items, but the groceries category was a sales driver in the 17-week quarter ended September 3.
Net sales for the fourth quarter were $77.4 billion, an increase of 9.4% from the 16-week quarter a year earlier.
For the 53-week full year, net sales were $237.7 billion, a 6.7% increase from the 52-week fiscal 2022.
Fourth quarter net income of $2.1 billion was about 16% higher than in the same period last year. For the full year, net income increased 7.7% to $6.2 billion.
Comparable sales in the United States increased 3.1% in the fourth quarter and 4.2% for the full year, excluding changes in gasoline prices and foreign exchange.
E-commerce comps declined 0.6% in the United States and were down 4.8% for the full year.
Traffic increased 5% in the U.S. in the fourth quarter and 5.2% worldwide, the company said. Transaction amounts declined 3.9% in the United States and about 4.5% companywide.
On an earnings call, Costco chief financial officer Richard Galanti emphasized weakness in bigger-ticket discretionary items as well as gas price deflation. The retailer added small-ticket “indulgence items” beyond the grocery aisles in response to changing consumer behaviors, Galanti said.
Costco said it ended the year with 71 million paid household members, up nearly 8% from a year ago. About 45% of those are higher-tier executive memberships, which cost $120 a year, twice the price of a typical annual membership. Galanti said executive members account for more than 70% of Costco’s total sales.
Galanti did not say when the next membership fee increase is coming. Its last bump came in June 2017, and based on its typical practice, the retailer was due to increase it in early 2023.
Costco operates 861 warehouses, including 591 in the United States 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 each in Iceland, New Zealand and Sweden.
Costco plans go open nine new clubs in the U.S. in the current quarter and one in Canada.
