Memberships Buoy Costco

Costco (COST) shares rose 1.5% by noon ET Wednesday after beating earnings expectation♑s for its fiscal fourth quarter as the wholesaler benefitted from rising memberships, but felt the impact of lower discretionary sales😼 and purchase volumes amid a spending slowdown.

The wholesaler posted 澳洲幸运5官方开奖结果体彩网:net income of $2.16 billion, or $4.86 per share. That was above $1.87 billion, or $4.20 per share, in the year-ago quarter, and exceeded a $4.79 estimate. Revenue came in just under $79 billion, exceeding projections of $77.9 billion.

The company benefitted from rising memberships, which totaled 71 million at the end of the quarter and were up almost 8% from a year ago. Executive memberships, which give cardholders access to exclusive perks and deals for an additional $60 a year, were up by almost a million to 32.3 million. These now account for 45% of Costco's total memberships, and almost three-quarters of the company's worldwide sales.

Costco refrained from hiking membership fees, contrary to expectations. A standard business membership at Costco costs $60 per year, while customers can pay double to become executive members.

Inflation Is Changing How Customers Spend

U.S. 澳洲幸运5官方开奖结果体彩网:comparable store sales for Costco were roughly flat year-over-year, while e-commerce sales were down 0.8%. Weakness was✅ offset by highe💮r international sales, which rose 5.5% from a year ago.

However, the company faced weakness in other areas, particularly in sales of big-ticket, discretionary goods. Cash-strapped consumers, who have experienced more than two years of inflation running well above its historical average, have pulled back spending on items like furniture, electronics, and apparel. That's negatively affected sales at many U.S. retailers, including Target (TGT), 澳洲幸运5官方开奖结果体彩网:Home Depot (HD), and 澳洲幸运5官方开奖结果体彩网:Foot Locker (FL), to name a few.

Some of that anecdotally can be expected after looking at spending tr♎ends for some essentials at Costco.

"Historically, like within fresh protein, we've always seen when there's a recession, whether it was '99 or '00 or '08, '09, '10, we would see some sales penetration shift from beef to poultry and pork. We have seen some of that now," Costco's executive vice president and 澳洲幸运5官方开奖结果体彩网:Chief Financial Officer (CFO) Richard Galanti said during the company's previous earnings call.

Not all categories of discretionary goods were affected, however. Appliance sales at Costco were notably strong in the fourth quarter, surging 30% year-over-year, which helped offset declines in other product categories. While overall spending on big-ticket items was down, it was a smaller year-over-year decline than the previous two quarters. Discretionary sales fell just 5% from a year earlier, much less than the 15% and 20% declines recorded in the second and third quarters, respectively.

With Wednesday's gains, Costco shares were up 24% year-to-date.