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Costco Earnings Beat Forecasts, Membership Costs Above $1.3 Billion

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Updated at 5:30 PM EST

Costco Wholesale (COST) Thursday posted better-than-expected fourth-quarter revenue, with membership revenues exceeding $1.327 billion, as new value-oriented customers piled up to find relief from the fastest inflation in four decades.

Costco said its diluted earnings for the three months ended Aug. 28, the company’s fiscal fourth quarter, were up 11.7% from last year to $4.20 a share, about 4 cents higher than the Street. consensus forecast.

The group’s net sales, Costco said, rose 15.2% to $70.76 billion, while total sales rose 15% to $72.091 billion, just above analysts’ forecasts of a total of $72. 07 billion.

Sliding gas prices may explain why revenues were only modestly above forecasts as pump costs fell more than 20% from their all-time high of $5.10 a gallon in early June through the end of Costco’s fourth quarter, while core inflation fell 1% in May to 0.1% in August.

Same-store sales grew 13.7% globally and 15.8% in the United States, Costco said, while e-commerce sales grew 7.1%. Membership revenues increased 7.5% to $1.327 billion for the quarter and $4.224 billion for the year.

Still, gross margins declined about 80 basis points to 10.18%, Costco noted, while total inventories were up 26% from last year, showing a slight improvement from “just the past few weeks.”

Costco shares were down 2.6% in after-hours trading after the earnings release, indicative of an opening bell price Friday of $474.55 apiece.

Earlier Thursday, major retail rival Target Corp (TGT) revealed plans to hire 100,000 employees to support sales efforts during the holiday seasonadds that it has plans to offer early-season discounts as it continues to monitor inventory levels after an unwanted build-up earlier this year, a plan that contrasts with just 40,000 seasonal additions planned at rival Walmart (WMT) .

Deloitte’s forecast of holiday retail sales, released earlier this month, indicates total holiday purchases will rise between 4% and 6% from last year to about $1.46 trillion, a marked slowdown from last year. the profit of 15% over the same period in 2021.

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