E-commerce growth strong, Costco Q2 revenue and holiday sales below expectations.

On the morning of March 8th, Beijing time, Costco (COST.US) announced its performance for the second quarter of the 2024 fiscal year, ending on February 18th. The financial report revealed that Q2 revenue was $58.44 billion, a year-on-year increase of 5.7%, which fell short of the market's expectation of $59.16 billion. Earnings per share were $3.92, compared to $3.30 in the same period last year, exceeding market expectations of $3.62. Despite an increase in sales and strong growth in e-commerce, Costco's holiday quarter revenue fell below market expectations. Costco's second quarter net sales were $57.331 billion, compared to $54.239 billion in the same period last year; membership fees were $1.111 billion, compared to $1.027 billion in the same period last year. In the three months ending on February 18th, Costco's net profit rose to $1.74 billion, compared to $1.47 billion in the same period last year. The company's comparable sales increased by 5.6%, with a 4.3% growth in the United States. Excluding changes in gasoline prices and foreign exchange rates, this indicator grew by 5.8% overall, and by 4.8% in the United States. More shoppers visited Costco and spent more on their shopping trips this quarter. CFO Richard Galanti stated during the company's financial report conference call that global traffic increased by 5.3%, with a 4.3% growth in the US. He said that average ticket prices in the US and globally increased. Galanti said that this quarter's inflation is roughly in line with the same period last year, allowing the retailer to lower prices on some goods. He noted that the inflation rate for the second quarter was as high as 1% compared to the previous year. Galanti mentioned that due to lower shipping and product costs, prices for many new products such as sporting goods, lawn and garden items will also be lower than a year ago. Costco has 875 warehouses, with 603 in the US and Puerto Rico. It also has stores in over a dozen countries including Canada, Mexico, Japan, and China. In the second quarter of this year, Costco opened four new stores, three in the US and one in Shenzhen, China. Galanti stated that this is the sixth store the company has opened in China. Among the three new stores in the US, two are Costco business centers, specifically for restaurant operators and small business owners. E-commerce Growth Galanti mentioned that Costco has made changes to its website to improve the online shopping experience. It has also adjusted its business to be more adept in digital technology. E-commerce sales in this quarter grew by 18.4% compared to the previous year. For example, Costco launched a new mobile app homepage in February that loads in less than 2 seconds, compared to the previous 8 seconds. Galanti stated that this initiative is crucial as about 60% of the company's e-commerce business is conducted through mobile apps and mobile browsers. Last week, it introduced Apple Pay to all online members. It also added more products to Costco Next, a seller platform that allows members to buy goods directly from some of the retailer's suppliers at discounted prices. He mentioned that a variety of products are available, including electronics, bikes, and clothing. As Costco has done a better job in recent months in promoting the value of its online products, especially large items such as appliances, mattresses, and tires, e-commerce sales have gained momentum. Galanti stated that app downloads increased by 2.8 million this quarter, with a total of approximately 33 million downloads so far.