---
title: "Costco: How was the excellent performance achieved?"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/dolphin/post/26075927.md"
description: "Q1 2025 Earnings Call Minutes"
datetime: "2024-12-14T08:21:56.000Z"
locales:
  - [en](https://longbridge.com/en/dolphin/post/26075927.md)
  - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/26075927.md)
  - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/26075927.md)
author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)"
generator: "portal-rs"
---

# Costco: How was the excellent performance achieved?

**Below is the transcript of the** $Costco Wholesale(COST.US) **Q1 FY2025 earnings call. For earnings analysis, please refer to《**[**Costco: The True 'Retail King' That Defies Cycles**](https://longportapp.cn/zh-CN/topics/26075286)

**1\. Key Earnings Highlights:**

**2\. Detailed Earnings Call Content**

**2.1. Key Management Discussion:**

**Business Growth Highlights**

\- Opened **7 new warehouses** in Q1 FY2025, including 1 relocation, net increase of 6, with 4 outside the U.S.

\- Opened **the 897th warehouse** in California the day before Thanksgiving, achieving a record $2.9M in opening-day sales.

\- Plans to open **29 warehouses** in FY2025, including 3 relocations, net increase of 26, with 10 outside the U.S.

**Core Merchandise Sales**

**\- Fresh Foods:** Mid-single-digit comp sales growth in Q1, leading core merchandise.

**\- Meat Department:** Double-digit growth, with demand for both premium and value cuts.

**\- Non-Food:** High-single-digit growth despite calendar shifts. Categories like gold jewelry, gift cards, home goods, and sporting goods saw double-digit growth. Added premium brands like Peloton and Wrangler.

**\- Grocery & Sundries:** Mid-single-digit comp growth, led by refrigerated/frozen foods. Strong momentum for international items like pork dumplings and hotpot beef. Kirkland Signature grew faster than overall sales, with price cuts on items like peanut butter.

**Ancillary Businesses**

**\- Pharmacy:** Strongest sales growth, leveraging tech like new Rx inventory software and Instacart delivery.

**\- Food Court & Optical:** Performed well this quarter.

**\- Gasoline:** Low-double-digit sales decline due to lower prices.

**\- Costco Travel:** Unique member value, with users spending ~2x more. Shared fun stats (e.g., rentals could fill U.S. parking lots 8.5x).

**Digital & E-Commerce**

\- Tech roadmap progress, e.g., warehouse inventory checks via app. U.S. app downloaded **2.9M times** in Q1 (~42M total).

\- E-commerce traffic, conversion, and AOV rose YoY, driving comp sales. Hardware, sporting goods, and home goods saw double-digit online growth.

\- Costco Logistics excelled; Costco Next set records during Thanksgiving week.

**Retail Media**

\- Completed first targeted media campaign with a major CPG partner, achieving 2-3x ROAS. Working with 25+ vendors on next wave.

**Net Income**

\- Q1 FY2025: **$1.798B** ($4.04 diluted EPS) vs. $1.589B ($3.58) YoY.

\- Includes $100M tax benefit ($0.22 EPS) from stock comp vs. $44M ($0.10) YoY.

\- Excluding discrete taxes, **net income and EPS** grew **9.9%** and **9.8%**, respectively.

**2.2. Q&A Highlights**

**Q: Consumer health & seasonal inventory (e.g., apparel)? Non-essential category share?**  
A: **Consumers prioritize novelty, quality, and value.** Non-food categories like jewelry and gift cards grew double-digits. Meat/produce sales strong, with share gains in most categories.

**Q: Traffic/basket drivers? Retail media upside?**  
A: **Traffic/frequency solid;** U.S. basket size +~2% ex-fuel. Retail media is incremental, with agency interest.

**Q: Core margin drivers? Price reinvestment vs. other investments?**  
A: **Food flat, non-food down slightly, fresh up—net +3bps.** Hardware includes storage, tools, etc. Will balance price investments.

**Q: Online vs. offline member renewal? Costco Next impact?**  
A: Digital recruits renew slightly below historical rates. **Renewal data lags 18 months.** Next enhances member relationships.

**Q: Stock split? Tariff views?**  
A: **No split planned but evaluating.** Tariff timing/scope uncertain; past mitigation includes sourcing shifts.

**Q: CapEx outlook?**  
A: **Gradual increases reflect growth** (new warehouses, tech). Prioritize warehouse quality.

**Q: Int'l pipeline? Price vs. other investments?**  
A: **\~30 warehouses/year, mostly ex-U.S.** Fee reinvestment balances price cuts, wages, Kirkland innovation.

**Q: Core margin +17bps ex-gas drivers?**  
A: **Gas hurt by Mideast; e-com/credit card benefits offset.**

**Q: U.S. growth runway amid competition?**  
A: New warehouses (e.g., Pleasanton) drive incremental visits. Focus on member experience.

**Q: E-com penetration (with Instacart/Uber)? Kirkland share?**  
A: **E-com ~7-8% of sales; >10% with others ex-gas.** U.S. Kirkland ~33%, growing faster.

**Q: Traffic drivers?**  
A: Cross-functional: buying, ops, pharmacy/food court traction.

**Q: Competitive response to fee hikes/Scan & Go?**  
A: **Biggest competitor is ourselves.** Scan & Go not a focus now.

**Q: Category expansion/low-margin items?**  
A: Always exploring (e.g., caskets, gas). Benefits include traffic/cross-sell.

**Q: High-income wallet share? 2% rebate +5bps?**  
A: Opportunity via brands like Kirkland. Rebate growth offsets quarterly.

**Q: Instacart/Uber learnings?**  
A: Changed habits; growth at/above digital pace.

**Q: Teamsters negotiations?**  
A: 40-year fair-dealing record; aim for timely agreement.

**Q: Int'l trends?**  
A: Momentum solid; share gains continue.

**Q: E-com UX vs. peers? Digital member growth?**  
A: Outpaced U.S. e-com growth. Improving search/app inventory. Digital recruits less aware of executive benefits.

**\<End>**

**Disclosures:**[**Dolphin Research Disclaimer**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [COST.US](https://longbridge.com/en/quote/COST.US.md)

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**