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While inflation continues to weigh on consumer prices, not all retailers are feeling the impact of changing consumer behavior.
Thanks to a variety of unique items – from garden swings to fancy cuts of meat – and a standard inventory that has stayed true to its low prices, Costco released its earnings for the third quarter of fiscal 2024 on Thursday. Sales reached $57.39 billion, an excellent increase of 9.1% year over year.
“Based on what we're seeing from our members right now, it's a very healthy environment,” Costco CEO and President Ron Vachris said in a conference call with investors.
Vachis noted that Wagyu beef, a $1,200 swing set and other new offerings like the infamous gold bars were well received by customers and driving up sales.
“We can't get enough of them, they're just a hit,” he said of the swings. “But again, it's that continued innovation of merchandise that's getting our members excited and really driving sales for us there… people are engaging at a much higher level.”
Related: Woman goes viral for returning Costco couch after 2 years
A report last month showed that Costco's 1-ounce 24-karat gold bars, which launched in October 2023, are estimated to bring the warehouse chain $100 million to $200 million each month. It's another innovative item that members come to the chain for, and the viral product sells out at almost every restock.
Membership revenue was also a growth area for Costco in the third quarter, with total revenue of $1.123 billion, an increase of $79 million, or 7.6%, from the previous year.
Gary Millerchip, Costco's EVP and CFO, pointed out that while the chain has tried to increase membership fees every five years in the past (the last increase was seven years ago), Costco is in no hurry to do so – there doesn't seem to be a problem with renewing or starting a membership.
“We're really pleased with our membership renewal rates,” Millerchip said on the conference call. “We look at what's happened in the market over the last few years, and when we saw high inflation and the risk and concern of a recession … we're still evaluating those considerations to determine the right time, and when we get to the point where we feel it's the right time, we'll obviously be very open and direct and communicate that.”
And anyone worried about inflation in Costco's popular $1.50 hot dog and soda combo can rest assured.
Related: Exclusive Costco item worth $1,900 is flying off the shelves
“To dispel some recent speculation in the media, I would also like to confirm that the $1.50 hot dog price is safe,” Millerchip said cheekily.
Costco saw a 58% year-over-year increase through Friday afternoon.
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