Costco
However, shares ended up flat as expectations were in-line with investors' results. This continues a recent trend of companies posting strong results but shares not climbing higher. It may reflect that recent price gains were in anticipation of these results or a product of the recent, risk-off environment we are seeing in the markets.
Inside the Numbers
Costco benefitted from several trends in the quarter. There was less spending in so many categories including travel, restaurants, and nightlife, so spending on categories like gardening, home goods, exercise equipment, cookware, and home improvement have materially increased.
Another factor is the coronavirus which has led to increased sales for "essential" retailers like Costco which stayed open. Especially in the earlier months, they saw increases in all categories, since many retail locations were shut down.
For the quarter, Costco reported net income of $1.39 billion, or $3.13 a share. This was above analysts' expectations of $2.80 per share. Revenue came in at $53.4 billion which was 12.5% above last year's fourth quarter of $47.5 billion and above expectations of $52 billion. On a full-year basis, Costco's revenue increased by 9.3% to $163.2 billion from $152.7 billion in 2019. Net income was 9.3% higher to $4 billion from $3.66 billion.
Same-store sales were up 11.4% in the fourth quarter which is the largest gain in the company's history since 2000, and double what was seen in 2019's Q4. For the full-year, same-store sales increased by 9.2% which was the largest figure since 2004.
Another impressive figure was that Costco's e-commerce sales increased by 90% during the quarter. This offset some of the losses in Costco's travel division, hearing aids, and vision department which have been shuttered in many locations due to health regulations.
Stock Price Impact
Costco's stock has been a huge winner in nearly every timeframe. Its stock price has risen as the company takes an increasing amount of consumer spending. Costco has an interesting business model, where it has thin margins on all its product but makes its profits from membership fees.
Customers trust the Costco brand due to the quality of its products and low prices. Over the last decade, the stock is up by nearly 500%. Despite the lack of enthusiastic response to its earnings blowout, Costco's ascent is unlikely to be disturbed in the near-term and intermediate-term.
