Costco (COST) once again bulked up its bottom line on the back of gold bars and warehouse-friendly prices on everyday essentials.
The wholesale club posted adjusted earnings per share (EPS) of $3.92, soundly beating estimates of $3.62. Revenue came in at $58.44 billion, up 5.7% year over year but slightly lower than expectations of $59.04 billion, per Bloomberg data.
Same-store sales, excluding gas and foreign exchange, jumped 5.8%.
In the US, same-store sales growth came in higher than expected at 4.8%. Canada beat estimates with 9% same-store sales growth, while international stores posted a higher-than-expected increase of 8.2%.
Digital sales grew more than 18% compared to a year ago, powered by demand for gold bars, silver, and appliances, Costco CFO Richard Galanti told analysts on a late Thursday conference call.
Membership fees, a key revenue stream, came in at $1.11 billion, up from $1.03 billion a year ago. That's also a jump from Q1, which brought in $1.08 billion.
A Costco Gold Star membership costs $60 per year, while an Executive Membership goes for $120. Some on the Street predicted last year that Costco would raise fees this summer.
Shares of Costco pulled back 4.6% in premarket trading on Friday as Wall Street took the view the stock is fairly valued at current levels.
"The quarter was strong but it’s hard to see the catalyst for the next leg higher at the current valuation. COST is very well positioned to continue to take share but ... its high multiple (29.0x 2024E EV/EBITDA) and crowded positioning keeps us Neutral on the stock. We view the risk/reward as balanced at current levels," Citi analyst Paul Lejuez said in a note to clients.
Costco's shares are still up about 55% over the past year, handily beating the S&P 500's (^GSPC) 29% gain.
Joe Feldman of Telsey Advisory Group told Yahoo Finance it only "makes sense it would take a pause" after the "stock has been on fire lately."
He added, "The stock also has a history of taking a breather when it reports financial news. We are not concerned, given the business remains quite solid, as evidence by the comp trend."
The earnings rundown:
Here's what Costco reported in its fiscal second quarter versus Wall Street estimates, according to Bloomberg data:
Net sales: $58.44 billion versus $59.04 billion
Adjusted EPS: $3.92 versus $3.62 expected
Same-store sales growth: 5.8% versus 4.65% expected
US same-store sales growth: 4.8% versus 4.09% expected
Canada same-store sales growth: 9% versus 6.31% expected
Other international: 8.2% versus 6.17% expected
What else caught our attention
Costco's US customer traffic rose 4.3% in the quarter.
Costco opened its sixth store in China in the quarter, in Shenzhen. One more opening is expected in the country this year as part of a bid to open 30 new locations around the world.
Costco is getting into the sushi business. Said Galanti on the earnings call: "We recently opened our first fully operated sushi offering in Issaquah, Washington, across the street from our headquarters, with two more planned to open in the very near future. This operation is what we have successfully done for years — for many years — and throughout our Asia Costcos and several countries over there. The sushi program has proven to be a category where we can be successful in both quality and price, and we're looking forward to seeing more of that in the future."
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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