Costco reported their second quarter earnings last week, and the news was good. And way better than analysts were expecting. Costco reported net earnings of $1.35 per share or $598 million, which represents a 29% increase over last year’s $463 million or $1.05 per share. It was also better than the estimated $1.18 per share that analysts had been projecting.
The really good news for Costco is that membership numbers continue to go in the right direction: up. They have had an increase in the number of new memberships and renewals in the last quarter. In the last quarter, new memberships have increased 9% with Costco adding 700,000 Gold Star members and 100,000 primary business members. The total number of members has risen to 78.7 million, up from 73.4 million in the same quarter of last year. Membership renewal rates have ticked up just a bit too. The biggest growth has been in international renewal rates which are up to 87.9%, but still a bit under the 90.7% renewal rate seen in the US.
Costco has plans to add another 20 stores by the end of their fiscal year 2015. The majority of those are in the US, but the rest are planned for Japan, Australia, Korea, Mexico, Taiwan and the UK. And of course, that means that new membership numbers should continue to climb.
The growth for Costco is outstripping competitors like Walmart and Target. Sales at Costco stores open a year or more increased 8 percent in the last quarter (this is excluding changes in gasoline prices and foreign-currency exchange rates). However, in comparison, Wal-Mart reported a 1.5 percent increase in U.S. same-store sales for their last quarter and Target posted a 3.2 percent gain in their most recent quarter. Even without excluding the negative impacts of falling gas prices and currency fluctuations, Costco’s last quarter sales increased 4% overall, which is still stronger than their competitors.
For more information:
- Costco.com: Investor Center: COSTCO WHOLESALE CORPORATION REPORTS SECOND QUARTER AND YEAR-TO-DATE OPERATING RESULTS FOR FISCAL 2015 AND FEBRUARY SALES RESULTS
- Forbes: Costco Beats On Profits And Shows Significant Revenue Growth Potential
- Bloomberg: Costco Profit Advances as Revenue Growth Outpaces Wal-Mart