What You Need To Know About Costco's Quarter As Shares Slip

Costco Wholesale Corp COST shares are trading lower Wednesday following the retailer's quarterly results. Several analysts adjusted price targets following the print. 

What Happened: Costco said fourth-quarter net sales increased 9.4% year-over-year to $77.43 billion. It's important to note that all year-over-year comparisons include one extra week in the current year: Costco's fiscal fourth-quarter in 2022 spanned 16 weeks and its most recent quarter consisted of 17 weeks. 

Total revenues came in at $78.939 billion, which beat the consensus estimate of $77.9 billion. Net sales for the full year came in at $237.71 billion, up 6.7% year-over-year. 

The membership-based retailer reported quarterly earnings of $4.86 per share, which beat analyst estimates of $4.79 per share.

Comparable sales in the fourth quarter were up 0.2% in the U.S., up 1.8% in Canada and up 5.5% in the Other International segment. Total comps climbed 1.1% year-over-year, while total e-commerce sales fell 0.8%.

Membership fees came in at $1.509 billion, up from $1.327 billion on a year-over-year basis. Costco said it operates 861 warehouses, up from 853 at the end of the third quarter.

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On the conference call, the company said traffic, shopping frequency was up 5.2% worldwide and 5% in the U.S. Average transaction was down 3.9% worldwide and down 4.5% in the U.S., driven by weak big-ticket discretionary spending. 

The company also said it ended the quarter with a membership renewal rate of 92.7% in the U.S. and Canada. Paid household members grew 7.9% compared to the previous year. 

Analyst Changes: 

• Telsey Advisory Group analyst Joseph Feldman reiterated Costco with an Outperform and maintained a $575 price target.
• Raymond James analyst Bobby Griffin maintained Costco with an Outperform and raised the price target from $570 to $580.
• JPMorgan analyst Christopher Horvers maintained Costco with an Overweight and raised the price target from $525 to $571.
• Deutsche Bank analyst Krisztina Katai maintained Costco with a Buy and raised the price target from $651 to $652.

COST Price Action: Costco shares were down 1.62% at $544.01 at the time of publication, according to Benzinga Pro.

Photo: Mike Mozart from Flickr.