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Email Content: Poultry Industry News, Comments and more by Simon M. Shane

Costco Corporation Posts Q3, FY2023 Results


On May 25th Costco Wholesale Corporation (COST) posted results for Q3 of FY2023 ending May 7th. This big-box club chain serves as a bellwether for hybrid retail in-store and on-line spending and is a barometer of consumer confidence, offering groceries and household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.


For the most recent quarter, the Company earned $1,302 million on revenue (including fuel and membership fees) of $53,648 million with a diluted EPS of $2.93. For the corresponding Q3 of FY2022, Costco earned $1,353 million on equivalent revenue of $52,596 million with a diluted EPS of $3.04.  Revenue was 2.0 percent higher than in Q3 of FY2022 but net earnings fell by 3.8 percent. Gross margin for Q2 FY2023 was 12.1 percent, lower than the corresponding Q3 of FY2022 at 13.5 percent percent. Concurrently operating margin fell from 3.4 percent in Q3 FY2022 to 3.1 percent for the most recent quarter attributed to increased freight, transport, wages and utilities.


Comparable global same-store sales for Q3 2023 (excluding fuel and foreign exchange) attained 3.5 percent. U.S. same store sales were up 1.8 percent; Canada by 7.4 percent and the Other International category, 8.4 percent. E-Commerce was down by 9.0 percent


On May 7th Costco posted total assets of $66,752 million. Long-term debt and lease obligations attained $11,471 million. Costco had an intraday market capitalization of $229,660 million on June 6th. COST trades with a forward P/E of 38.4 and has ranged over the past fifty-two weeks from $443.20 to $564.74 with a 50-day moving average of $497.87. Costco closed pre-release at $486.72 on May 25th but closed on May 26th at $507.41 with the market up by two percent. COST fell short of a consensus  $3.29 EPS but was in line with expected sales that were depressed by lower unit fuel prices. According to CFO Richard Gallanti, consumers have shifted purchases of beef to chicken and less expensive protein that he correlates with an impending mild recession, notwithstanding favorable parameters characterizing the economy.


Twelve-month trailing operating margin was 3.4 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.6 percent and 28.4 percent on equity.


At the end of Q3 FY2023, Costco operated 853 warehouses. There are 587 in the U.S; 107 in  Canada; 40 in Mexico; 32 in Japan; 29 in the U.K. and 58 others in seven other nations among the E.U., Asia and Australia.

Copyright © 2024 Simon M. Shane