Costco (NASDAQ:COST): Strongest Q2 Results from the Large-format Grocery & General Merchandise Retailer Group
2024-09-23 10:12:44
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Costco (NASDAQ:COST) and the rest of the large-format grocery & general merchandise retailer stocks fared in Q2.
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
The 4 large-format grocery & general merchandise retailer stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1%.
Inflation progressed towards the Fed’s 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut’s timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, large-format grocery & general merchandise retailer stocks have been resilient with share prices up 6.6% on average since the latest earnings results.
Best Q2: Costco (NASDAQ:COST)
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Costco reported revenues of $58.52 billion, up 9.1% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ gross margin estimates and a narrow beat of analysts’ earnings estimates.
