Financial Report Outlook | Can Costco (COST.US) members sustain high growth after cracking down on sharing behaviors?

Costco (COST.US) will announce its earnings for the second quarter of the 2024 fiscal year after the market closes on March 7th, Eastern Time. The market expects Q2 revenue to be $57.88 billion, a year-on-year increase of 6.7%; and expects earnings per share to be $3.62, compared to $3.30 in the same period last year. After a strong holiday sales period, Costco is expected to report stable revenue and profit growth when it releases its second-quarter earnings report on Thursday. Analysts predict that Costco's net profit for this quarter will reach $1.62 billion, compared to $1.47 billion in the same period last year. Costco has already announced its sales performance for December and January, and will include February's sales performance in the upcoming earnings report. In December last year, during the busy holiday shopping season, the company reported net sales of $26.2 billion, a 10% increase from the same period last year. Net sales in January were $22.1 billion, a 5% year-on-year increase. Key Metric: Membership Numbers Costco's membership fee model is crucial for its continued financial growth. The company charges fees to members at various levels for access to its warehouses and e-commerce services. The company has strong brand loyalty among its members, with a renewal rate of 92.7% in the US and Canada in 2023. However, the company stated last year that widespread sharing of memberships between members and non-members could erode its profits, so it is cracking down on this sharing behavior. In January this year, Costco started requiring some customers at certain stores to scan their membership cards to enter the store. Therefore, investors may want to closely monitor how changes in Costco's membership admission policies affect its membership numbers. Analysts expect membership numbers to continue to grow at a steady pace. In the upcoming earnings report, the company is expected to report 72.8 million members, compared to 68.1 million in the same period last year. Business Focus: CFO Resignation Richard Galanti, who has been Costco's Chief Financial Officer since 1985, announced last month his plans to resign. Gary Millerchip, former CFO of Kroger (KR.US), will become Costco's new CFO on March 15th, with Galanti continuing to serve as the company's financial advisor until early 2025. During his approximately 40 years at Costco, in addition to overseeing the company's significant financial growth, Galanti has been the primary liaison between the company and investors. Investors speculate on whether the company will continue to release monthly sales reports and similar data after Galanti's departure.