The recent quarterly financial disclosure from Costco, a prominent American members-only warehouse club, unveiled the nuanced nature of its financial performance. While profit growth exceeded projections, revenue expansion fell short of estimates, indicating a prevailing trend towards heightened consumer prudence in expenditure.

Financial Synopsis

For the fourth quarter of fiscal year 2024, Costco reported revenue of approximately $79.70 billion, representing a marginal year-on-year increase of less than 1%, below analysts' forecasts of $79.96 billion. In contrast, the year-on-year growth in the previous quarter was approximately 9.1%. Diluted earnings per share (EPS) stood at $5.29, reflecting an 8.8% increase compared to the previous year, surpassing analysts' projections of $5.07.

During the fourth quarter, Costco's same-store sales growth decelerated to 5.4%, despite a year-on-year increase of 6.4% in foot traffic; however, customer expenditures declined by 0.9%. Particularly in the U.S. market, same-store sales experienced a 5.6% increase in foot traffic but a 0.3% decline in spending.

In July of the current year, Costco announced its first membership fee adjustment since June 2017, raising fees by $5 to $65 for members in the U.S. and Canada, effective from September 1. Last year, Costco generated $4.6 billion in revenue from membership fees. Prior to this fee revision after seven years, Costco had achieved a membership renewal rate of 92.9% in the U.S. and Canada. This change may potentially impact renewal rates or new membership enrollments in the coming months.

Market Responses

Following the release of the financial report, despite profit growth surpassing expectations, Costco's stock price dropped over 1% in after-hours trading due to the shortfall in revenue growth compared to expectations.

In an unexpected development, the U.S. Consumer Confidence Index from the Chamber of Commerce experienced its most substantial decline in three years in September, indicating consumers' concerns regarding the labor market and the overall economic outlook.

Reports on U.S. consumer shopping behavior indicate that, influenced by the pandemic, consumers are increasingly turning to online shopping, boosting their confidence in e-commerce. However, consumers remain cautious when it comes to in-store shopping.

Prospective Outlook

Costco's financial disclosure reveals that despite facing cost pressures, consumer spending remains robust; however, the prevailing cautious consumer attitude may impact future revenue growth. Currently, Costco continues to expand its global store count, with a total of 891 stores, including 7 in mainland China and 14 in Taiwan.

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