"Paid membership" model shows power! Costco Q2 profit exceeds expectations, sales increase against the market trend

Costco's quarterly profit growth exceeded expectations, showing that the large retailer is benefiting from continuous sales growth. The financial report showed that in the second quarter, Costco's revenue reached $69.6 billion, a year-on-year increase of 9.2%, surpassing expectations by $280 million; adjusted earnings per share were $4.58, 3 cents higher than the average expectation. Membership fee revenue for the quarter reached $1.36 billion, exceeding market expectations. As of the quarter ending February 15th, same-store sales increased by 7.4%, higher than the market's general expectation of 6.7%. Average transaction size in the quarter increased by 4.2%, and foot traffic increased by 3.1%. The large retailer stated that same-store sales in the United States increased by 5.9% (higher than the market's general expectation of 5.7%). Excluding the impact of gasoline prices and exchange rate fluctuations, same-store sales in the United States increased by 6.4%, and overall growth was 6.7%. Both of these figures exceeded analysts' general expectations. With large package sizes and unique product selection, Costco has attracted cost-conscious consumers - especially those with higher disposable incomes, winning market share as a result. The retailer has also expanded its e-commerce and delivery services, and added exclusive shopping hours for premium members. According to company documents, the renewal rate of memberships in its global and U.S. markets was slightly lower than the same period last year, but remained essentially unchanged from the previous quarter. Gold, jewelry, toys, and small electronics were the top-selling categories this period. Costco operates over 800 stores worldwide, and its constantly changing product range (including everything from tequila to chocolate pies under the Kirkland signature brand) has won favor with consumers. Shoppers are required to pay an annual membership fee, and typically belong to more affluent groups - the main driving force behind current U.S. consumer spending. Costco has been striving to catch up in the e-commerce sector, with its digital sales growth surpassing overall sales growth. In the most recent quarter, e-commerce sales at Costco grew by nearly 22%, exceeding average expectations. The retailer is cooperating with third-party delivery companies like Instacart, while also expanding services such as cake delivery and deli platters. This helps attract younger consumers, although the renewal rate for this group is lower than other customer segments. Potential tariff refunds The U.S. International Trade Court ruled on Wednesday that the U.S. Customs and Border Protection must refund tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in a case brought by auto parts manufacturer Atmus Filtration Technologies (ATMU.US). This ruling is expected to accelerate the process of refunding tariffs paid by businesses in the past year, benefiting not only large retailers like Costco, logistics giant FedEx Corporation (FDX.US), but also many small businesses that have been under pressure due to rising import costs. This decision comes after the U.S. Supreme Court ruled that most of the tariffs imposed by the Trump administration under the IEEPA were unlawful. The Supreme Court referred the issue of whether to refund the tariffs to the U.S. International Trade Court, which has exclusive jurisdiction over the matter. The Trump administration had expressed dissatisfaction with this ruling and was seeking new legal avenues to continue imposing tariffs on imported goods. Government officials had said that if forced to refund the tariffs already collected, the process would be "extremely complex." The judge who made this decision, Richard Eaton, stated that he would handle cases related to refunding IEEPA tariffs alone. Scott Lincicome, Vice President of Economic Policy at the Cato Institute, described the judge's instructions as "surprisingly simple," issuing refunds to all importers as soon as possible. He pointed out that this ruling is like a "heavy bomb" for the market. International trade lawyer Doug Jacobson stated that this order means that all IEEPA tariffs paid since the end of April last year should be refunded. According to estimates from the budget model at the Wharton School of the University of Pennsylvania, U.S. Customs had collected approximately $175 billion through IEEPA tariffs, and this money now needs to be refunded to importers along with interest. This ruling means that importers do not need to file individual lawsuits to receive refunds. Previously, companies including Costco, FedEx Corporation, Toyota Motor Corp. Sponsored ADR (TM.US), had filed legal suits over tariff issues. Jacobson stated that more than 2,000 related cases pending in the International Trade Court are expected to be resolved collectively due to this ruling. Lincicome said that this is a "victory" for many small businesses that do not have the resources to litigate. In an unrelated document submitted to the court, the U.S. government confirmed that it will pay interest on the refunds. A report released this week by the Cato Institute estimated that if the government delays the refunds, the cost of interest could increase by approximately $700 million for each month of delay. Ideally, the U.S. Customs and Border Protection could automatically refund tariffs to businesses through its digitalized customs system. Industry insiders believe that if the government chooses to execute quickly, companies could receive refunds within a few months. However, some legal experts expect the government may try to delay implementation. Former U.S. Trade Representative Office official and current King & Spalding partner Ryan Majerus stated that the government may apply for a stay of execution or extend the implementation period. Lincicome also believes that the government may delay the refund process through appeals or increased customs inspections. In another document submitted to the court, the U.S. government has confirmed that it will pay interest on the refunds. According to a report released by the Cato Institute, if the government delays refunds, interest costs could increase by approximately $700 million for each month of delay.