Costco Wholesale's revenue momentum remains strong, showcasing its dominance in the retail sector even amidst challenges. The warehouse chain, featured prominently in the February review by UBS Securities, demonstrated an impressive 8.6% year-over-year growth in US comparable sales. This uptick becomes even more significant considering the overall retailer sector faced soft trends, influenced by adverse weather conditions and declining consumer confidence. The brokerage's analysis points out that this robustness in sales performance indicates Costco's significant share gains and its ability to withstand macroeconomic pressures that are affecting other retailers.
Interestingly, despite reporting total revenue of $63.72 billion for the 12 weeks ending February 16, reflecting an increase from $58.44 billion compared to the same period last year, the company slightly outpaced the FactSet consensus estimate of $63.11 billion. Earnings per share also saw growth, rising to $4.02 from $3.92 a year earlier, although this fell short of analyst expectations of $4.11.
Chief Financial Officer Gary Millerchip highlighted that foreign exchange impacts contributed negatively to the translation of international earnings to US dollars, accounting for a drop of $0.13 per share. Looking ahead, CEO Ron Vachris provided insights into the company's strategy to navigate ongoing challenges.
He indicated that headwinds stemming from foreign exchange issues are expected to persist but affirmed the dedicated efforts of the management team in mitigating these impacts on their member prices. As Vachris noted, approximately one-third of Costco's sales in the US are sourced from international markets, with a lesser fraction originating from China, Mexico, and Canada. The reaction on Wall Street was palpable, with shares of Costco dropping by 7% during Friday's afternoon trading session.
Amidst this volatility, UBS analysts suggest that the company’s experience in managing tariff-related risks remains a crucial element to monitor, asserting that uncertainties could ultimately favor Costco's operational strategies. Overall, Costco stands resilient with robust revenue growth ahead, presenting a compelling scenario for investors keen on gauging the retail landscape's shifts and potential..