As inflation continues to plague consumer prices, not all retailers are feeling the effects of changing consumer behavior.
Thanks to a slew of unique items, from outdoor swing sets to fancy cuts of meat, and standard inventory that has stayed true to low prices, Costco posted earnings for fiscal Q3 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 on a call with investors.
Vachis noted that Wagyu beef, a $1,200 swingset, and other new offerings like the infamous gold bars have been boding well with customers and driving revenue up.
“We can’t get enough, they’re just blowing out,” he said of the swingsets. “But it’s, again, that continuous innovation of merchandise that is exciting our members and really driving some sales for us there … people are engaging at a much higher level.”
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A report last month showed that Costco’s one-ounce, 24-karat gold bars that debuted in October 2023 generate an estimated $100 to $200 million for the warehouse chain every month. It’s another innovative item that members come to the chain for, and the viral product sells out during nearly every restock.
Membership fee income was also an area of growth for Costco in Q3, with a total income of $1.123 billion, an increase of $79 million or 7.6% year over year.
Costco EVP and CFO Gary Millerchip noted that though the chain has historically sought to increase the membership fee every five years (the last hike was seven years ago), Costco is in no rush to do so — there doesn’t seem to be a problem with membership renewal or initiation.
“We feel really good about membership renewal rates,” Millerchip said on the call. “We look at what’s happened in the marketplace over the last few years and when we were seeing high inflation and the risk and concern around recession … we’re still evaluating those considerations to determine what the right timing is and when we reach that point where we feel it is the right time, of course, we’ll be very open and direct and communicating that.”
And for those worried that inflation may 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 the $1.50 hotdog price is safe,” Millerchip said cheekily.
Costco was up 58% year over year as of Friday afternoon.
