Costco reports fiscal fourth-quarter earnings after Thursday's close. Beyond the headline EPS number, traffic, memberships, and spending mix will help show whether US households are pulling back or simply buying smarter.
Costco reports its fiscal fourth-quarter results after the closing bell on Thursday, and Wall Street expects EPS of around $6.53 to $6.55 on revenue of roughly $94.9 billion. Those figures matter, but the more interesting question is whether the US consumer is actually weakening or simply becoming more selective about where to spend.
Retail data still points to resilience
Heading into the earnings call, recent US retail sales data argues against any outright consumer collapse. Retail sales rose 1.2% in August, comfortably beating expectations, while spending excluding gasoline also stayed strong. That resilience, however, is being tested by a less comfortable inflation backdrop: headline CPI is running at 3.4%, and gasoline prices are up 27.4% from a year earlier.
Costco's early numbers already look solid
Costco has already reported fourth-quarter net sales of $93.9 billion, up 11.3% year-on-year. The more telling clues on Thursday will come from traffic, basket size, memberships, and management commentary on discretionary spending.
In the prior quarter, shopping frequency increased 2.4% while the average transaction rose 7.3%. Paid memberships reached 82.9 million, with US and Canada renewal rates holding at 92.2%. That does not look like a consumer disappearing — the behaviour instead looks value-driven.
Members are trading down, not out
Costco has said members are responding to higher fuel prices by using its gas stations more often, and the company has cut prices on selected everyday items to reinforce its value proposition. That came at a cost: reported gross margin was compressed by 21 basis points in the last quarter, though it was roughly flat once gasoline effects were excluded.
As a result, the EPS beat or miss matters less than the composition of spending. If traffic, renewals, and essential-category demand stay firm while discretionary purchases soften, the signal may not be that the US consumer is breaking down. It may simply mean households are still spending, just demanding more value for every dollar.
Source: Investinglive
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