Financial Report Preview | Focus on digital sales growth, first price increase in seven years, is Costco's Q4 performance worth looking forward to?

Costco (COST.US) will announce its fourth quarter fiscal 2024 earnings after the US stock market closes on September 6, Eastern Time. This will be the first financial report from the warehouse retailer since raising membership fees for the first time in seven years. According to analysts' expectations, Costco is expected to achieve close to $80 billion in revenue and a net profit of $2.26 billion, compared to $78.9 billion and $2.2 billion in the same period last year. Key indicator: digital sales growth Morgan Stanley analysts wrote earlier this month that Costco's leadership has hinted at plans to catch up with competitors who have a larger share in digital sales, as Costco has been lagging behind in online shopping. During the last quarter's earnings call, Costco's leadership mentioned that due to efforts to improve the shopping experience on its website and app, e-commerce sales had grown by over 20% year-on-year. Costco has been working on improving the speed of its app and has added features such as searching nearby warehouses for inventory to see if specific items are in stock. Morgan Stanley recently raised its target price for Costco stock from $855 to $950, calling it "one of the best compound growth stories in retail" and stating that they believe Costco's growth rate in digital same-store sales over the next decade will exceed pre-pandemic levels. Business focus: new membership fees In July of this year, Costco announced its first membership fee increase in seven years, effective from September 1. These changes will not impact earnings in the fourth quarter, but executives may be asked during the earnings call if they have seen any changes in membership registrations or renewals since the new prices were implemented. While the recent membership fee increase has raised speculation about customer reactions, it may increase profits without significantly affecting store traffic. By raising membership fees by about $5, management hopes to offset operational costs while providing greater value to members. The retailer expects to have 75 million members this quarter, higher than the 71 million in the same period last year and 74.5 million in the third quarter. Costco's stock closed at $906.98 on Friday, below the record high of over $923 reached last month. The company's stock has risen by nearly 40% so far this year.