First Quarter Costco (COST) Profits Beat, Ecommerce Sales Up 14.3% – Dec 10, 2021

Costco Wholesale Company (COST Free Report) released decent results for the first quarter of fiscal 2022, in which both top and bottom results not only exceeded Zacks’ consensus estimate, but also improved year over year. . The quarter marked the third straight beat in earnings. This member warehouse operator maintained impressive comparable sales. In addition, the company’s e-commerce sales continued to show strength. Still, supply chain bottlenecks and higher labor and freight costs remain concerns.

Table of first quarter results and sales

Costco posted adjusted quarterly earnings of $ 2.97 per share, well above Zacks’ consensus estimate of $ 2.59. On a reported basis, quarterly earnings were $ 2.98 per share, which includes a charge of 20 cents for the write-off of certain information technology assets and a compensation benefit of 21 cents. action-based. We note that the company reported adjusted earnings of $ 2.29 per share – excluding tax benefits of 33 cents – during the prior year period. The year-over-year increase in net income can be attributed to higher income.

Total revenue, which includes net sales and membership dues, was $ 50,363 million, up 16.6% from the prior year quarter. The measure also exceeded Zacks’ consensus estimate of $ 50,024 million.

Costco’s growth strategies, improved pricing management, decent membership trends and increasing e-commerce penetration contributed to its performance. In the current quarter, the Company’s e-commerce comparable sales increased 14.3% year-over-year. Excluding the effect of gasoline prices and the exchange rate, the same was an improvement of 13.3% year over year.

Deepen

Costco’s net sales increased 16.7% year-over-year to $ 49,417 million, while membership fees rose 9.9% to $ 946 million in the current quarter. Comparable sales increased 15% year over year quarter, reflecting 14.9%, 17.2% and 13.4% improvement in the United States, Canada and other international locations , respectively. We note that the traffic or frequency of purchases increased by 6.8% worldwide and 5.9% in the United States. The average number of transactions or tickets increased by 7.7% worldwide and 8.5% in the United States.

Excluding the impact of fluctuations in foreign currencies and gasoline prices, the company experienced comparable sales growth of 9.8% during the quarter. The United States, Canada and other international locations recorded same-store sales increase of 9.9%, 8.3% and 10.9%, respectively.

Operating profit for the quarter increased 18.4% year-on-year to $ 1,693 million, while operating margin (as a percentage of total revenue) edged up 10 basis points to 3. 4%.

Store update

Costco currently operates 828 warehouses – 572 in the US and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the UK, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China and one in Iceland.

During the quarter under discussion, Costco opened nine units, including one relocation. For the remainder of the year, the company plans to open 23 new units, including four moves.

Financial aspects

Costco ended the presented quarter with cash and cash equivalents of $ 12,751 million and long-term debt (excluding current portion) of $ 6,667 million. The company’s equity was $ 18,463 million, excluding non-controlling interests of $ 537 million. Management incurred capital expenditures of $ 1.05 billion during the first quarter. The company has forecast capital spending of around $ 4 billion for fiscal 2022.

Shares of this company Zacks Rank # 3 (Hold) have gained 37.8% in the past six months compared to the industry rally of 17.7%.

3 choices not to be missed

Some higher ranked actions are Boot Grange Holdings (BOOT Free report), Tapestry (TPR Free report) and Target (TGT Free report).

Boot Barn Holdings, the lifestyle retailer of western and work shoes, clothing and accessories, sports a Rank 1 of Zacks (strong buy). BOOT posted a surprise earnings of 35.3% on average over the past four quarters. You can see The full list of today’s Zacks # 1 Rank stocks here.

Zacks consensus estimate for Boot Barn Holdings’ sales and earnings per share (EPS) for the current year suggests growth of 54.6% and 188%, respectively, from a year ago .

Tapestry, which provides luxury accessories and branded lifestyle products, is ranked # 1 in Zacks. The company has achieved a surprise of 29% on average over the last four quarters.

Zacks’ consensus estimate for Tapestry’s sales and EPS for the current year suggests growth of 14.8% and 17.9%, respectively, from the prior year period. TPR has an expected EPS growth rate of 12.3% over three to five years.

Target, a general merchandise retailer, carries a Zacks Rank # 2 (Buy). The company has achieved a surprise profit of 19.7% on average over the past four quarters.

Zacks’ consensus estimate for Target’s sales and EPS for the current year suggests growth of 13.9% and 40.1%, respectively, from the prior year period. TGT has an expected EPS growth rate of 14.4% over three to five years.