What happened
Shares of Costco Wholesale (COST 0.05%) rose more than 10% last month, according to data provided by S&P Global Market Intelligence, following its fiscal third-quarter earnings release.
So what
Costco's net sales climbed 7.4% year over year, to $33.96 billion, driven by new store openings and strong comparable-store sales growth. The discount chain's comps grew 5.5%, including a 7% increase in its key U.S. market. Notably, Costco's e-commerce sales jumped 22%, giving evidence that the retailer is performing well in this increasingly important area.
All told, Costco's net income -- excluding a one-time tax benefit -- rose 11%, to $833 million, or $1.89 per share. Analysts had been expecting earnings per share of only $1.81.
Costco's revenue and earnings are growing at an impressive clip. Image source: Getty Images.
Now what
At the core of Costco's business strategy is its membership program. In exchange for a modest annual fee, members get to shop at Costco's discount-filled stores. And the more the company earns in membership fees, the more savings it can pass on to its customers. It's a virtuous cycle that has propelled Costco's sales and profits for decades.
Costco's subscriber growth figures and membership renewal rates -- which typically clock in at roughly 90% -- show that shoppers appreciate the value the warehouse chain provides. And with Costco's stock rising to new all-time highs in recent weeks, it appears that investors also appreciate the popular warehouse chain's simple, but effective, strategy.
