Key Metrics

Costco’s growth in recent years has been driven by effective price management, growing membership, and greater penetration of the company’s e-commerce platform, which subsequently grew during the pandemic. Total membership including executive, business and Gold Star cardholders is likely to increase to approximately 68.4 million, up 6.2% from the same period last year.1 However, growth has slowed in recent quarters as persistently high inflation and rising interest rates hit household budgets, with the company’s sales of discretionary items such as TVs and refrigerators being most adversely affected.

Costco, Key Metrics

Q3 FY 2023 (Projected) Q3 FY 2022 Q3 FY 2021
Net Income ($B) 1.456 1.353 1.220
Comparable Store Sales Growth (%,) 2.32% 16.60% 18.20%
Memberships (M) 68.37 64.40 60.60

The effect of slowing sales has been even greater on the company’s e-commerce business, where revenue likely fell 6.4% from a year ago, versus annual growth of 7.4% in the same quarter last year. It’s a stark reversal from the onset of the pandemic, when e-commerce sales more than doubled on an annual basis in the fourth quarter of 2020.

Despite the slowdown, the wholesaler maintains a loyal customer base, which could allow it better withstand economic headwinds relative to competitors.2 At the same time, sales of certain categories of products likely held up as consumers shifted their spending habits. Sales of food and beverages, and fuel at the company’s gas stations were likely robust as consumers spent more of their income on necessities.

Costco shares are up just over 8% so far this year, underperforming the broader consumer discretionary sector, which is up 18% over the same period.