Categories AlphaGraphs, Analysis, Earnings, Retail
Costco Q1 Earnings Preview: Key metrics point to another strong quarter
Warehouse club operator Costco Wholesale Corp. (NASDAQ: COST) will be publishing earnings for the first quarter of 2020 on Thursday at 4:15 pm ET. Market watchers forecast earnings of $1.71 per share for the November quarter, up 6% from last year.
Initial estimates published by the company recently showed that net sales rose 5.6% annually to $36.24 billion in the first quarter, slightly below the $37.25-billion sales analysts forecast. Total comparable store sales moved up 4.3%.
Also read: BJ’s Wholesale Q3 Earnings Snapshot
While margins stand to benefit from the stable comparable store performance and private-label sales, high costs related to elevated China tariffs might weigh on profitability. Though trade tensions have eased in recent months, high import duties remain a concern for American retailers.
Key Growth Driver
Competitive pricing and steady membership growth continue to be the primary growth drivers as far as the top-line is concerned. The management’s efforts to ramp up the e-commerce platform, both in the local market and overseas, have been yielding the desired results, adding to sales growth. Meanwhile, there was a dip in online sales in November, mainly due to the timing of holidays and technical issues related to the website.
Unchallenged
Costco has long been a market leader, thanks to the heavy discounts and extensive merchandise assortment. The strategy helps the company keep expanding its market share, which is expected to continue in the coming quarters. In the long term, however, profitability might come under pressure from high operating expenses and labor costs as the company strives to stay ahead of competitors on the pricing and delivery fronts.
Q4 Outcome
Costco ended the fiscal year on a mixed note, with sales moving up 7% annually to $48 billion in the fourth quarter even as comparable-store sales growth slowed. Earnings rose 5% from last year to $2.47 per share and came in above the market’s expectations.
Competition
Recently, Walmart (WMT) raised its full-year guidance after reporting strong third-quarter earnings that exceeded estimates, reflecting its e-commerce initiatives and clout in the domestic market. Earnings rose 7% to $1.16 per share aided by a 2.8% comparable sales growth.
Also see: Costco Q4 2019 Earnings Conference Call Transcript
Last month, Costco shares climbed to a record high, after gaining 43% since the beginning of the year. The stock has maintained a steady uptrend in recent years, often outperforming the market.
Most Popular
What to look for when CVS Health (CVS) reports Q3 earnings
Healthcare company CVS Health Corporation (NYSE: CVS) is all set to report earnings next week, with Wall Street expecting a mixed outcome. The company has been facing challenges in certain
eBay (EBAY): A few factors that helped drive growth in Q3 2024
Shares of eBay Inc. (NASDAQ: EBAY) stayed green on Friday. The stock has gained 32% year-to-date. The ecommerce leader delivered revenue and earnings growth for the third quarter of 2024,
CVX Earnings: Chevron reports lower revenue and profit for Q3 2024
Energy exploration company Chevron Corporation (NYSE: CVX) on Friday announced third-quarter 2024 financial results, reporting a decline in net profit and revenues. Net income attributable to Chevron Corporation dropped to
Comments
Comments are closed.