Costco Delivers Steady 1Q25 Results, Poised for Holiday Success
1min read Costco continues to demonstrate resilience and operational excellence in a challenging retail environment, delivering strong first-quarter fiscal 2025 results.
Despite headwinds from a later Thanksgiving holiday and lower gas prices, the membership warehouse retailer achieved nearly 10 percent year-over-year growth in adjusted earnings per share, which came in at $3.82, slightly ahead of analyst expectations.
Comparable sales, adjusted for gas prices and foreign exchange effects, grew by 7.1 percent, up slightly from the previous quarter’s growth of 6.9 percent. This performance underscores the continued appeal of Costco’s value proposition, which resonates strongly with customers prioritizing affordability and quality amid economic uncertainty.
The growth in comparable sales was driven primarily by increased shopping frequency, which rose 5.1 percent globally. The food and sundries category, a key driver of Costco’s value-oriented offerings, posted mid-single-digit growth, highlighting its strength in meeting consumer needs for essential goods.
Non-food categories also delivered impressive results, with high-single-digit growth in areas such as jewelry, home furnishings, sporting goods, gift cards, and gold bars. This broad-based demand supported a 13.2 percent increase in e-commerce comparable sales.
Costco’s ongoing investments in its digital capabilities are yielding results, as evidenced by higher traffic, improved conversion rates, and larger average order values in its online channel.
However, a slight decline in Costco’s worldwide membership renewal rate, which slipped to 90.4 percent from 92.8 percent a year earlier, raises some concerns. This decline is partly attributable to the membership fee increase implemented on September 1, as well as a shift toward more new members renewing through digital channels. While underlying renewal rates remain robust, the impact of this mix shift is expected to persist through fiscal 2025.
Despite these challenges, Costco’s year-to-date performance—up over 50 percent—highlights investor confidence in the retailer’s ability to navigate shifting consumer preferences and macroeconomic pressures.
With its strong focus on value and bulk purchasing, Costco is well-positioned to capture consumer spending during the holiday season, particularly as shoppers seek affordable gift options and essential goods.
As the retail sector faces heightened competition and economic headwinds, Costco’s consistent execution and adaptability continue to set it apart. While the company’s premium valuation may limit immediate upside, its solid fundamentals and leadership in value retailing support a favorable long-term outlook. Costco’s strong start to fiscal 2025 reinforces its reputation as a reliable performer in the evolving retail landscape.
