As inflation continues to hurt consumer prices, not all retailers are feeling the effects of changing consumer behavior.
With a variety of unique items from outdoor swing sets to fancy cuts of meat and standard inventory that has stayed true to its low prices, Costco posted earnings for the fiscal third quarter of 2024 on Thursday with revenue reaching $57.39 billion, a stellar 9.1% year-over-year increase.
“It's a very healthy environment from what we see from our members right now,” said Costco CEO and President Ron Vachris. in a call with investors.
Vachis noted that Wagyu beef, a $1,200 set and other new offerings such as the infamous gold bar have been good with customers and increased revenue.
“We can't get enough, they're just exploding,” he said of the swingsets. “But it's, again, that constant innovation of merchandise that's getting our members excited and really driving some sales for us there … people are engaging at a much higher level.”
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or report last month indicated that Costco's one-ounce 24-karat gold bars, which debuted in October 2023, generate about $100 million to $200 million for the warehouse chain each month. It is another innovative item that members come to the chain for and the viral product is sold during almost every refill.
Membership fee revenue was also a growth area for Costco in the third quarter, with total revenue of $1.123 billion, an increase of $79 million or 7.6% year over year.
Costco EVP and CFO Gary Millerchip noted that although the chain has historically sought to raise the membership fee every five years (the last increase was seven years ago), Costco is in no rush to do so — it doesn't seem to have any issues with renewal or membership initiation.
“We feel really good about membership renewal rates,” Millerchip said on the call. “We look at what's happened in the market over the last few years and when we were seeing high inflation and the risk and concern about recession … we're still evaluating those considerations to determine what the right time is and when we get to it point where we think the time is right, of course, we'll be very open and direct and communicate that.”
And for those worried that inflation might be coming for Costco's beloved $1.50 hot dog and soda combo — fear not.
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“To clear up some recent media speculation, I also want to confirm that the $1.50 hotdog price is safe,” Millerchip said cheekily.
Costco it was upstairs 58% year over year as of Friday afternoon.