What you need to know before Costco earnings

Key takeaways

Wholesaler Costco reports fiscal third-quarter earnings after the bell on Thursday, May 30.
Analysts expect Costco to report rising revenues and net income compared to the year-ago period as membership growth grows.
Uber recently announced this that Uber Eats users can order Costco products through the app, whether they are a Costco member or not.
This earnings report will be Costco’s first in decades with a new CFO, following the departure of longtime CFO Richard Galanti in March.

Wholesaler Costco (COST) reports fiscal third-quarter earnings after the closing bell on Thursday, May 30, which will be the retailer’s first report in decades with a new chief financial officer (CFO) after longtime CFO Richard Galanti stepped down from the position in March .

Analysts expect Costco to report revenue growth 7.9% year over year to $57.89 billion, up from $53.65 billion in last year’s third quarter, according to analyst estimates compiled by Visible Alpha. Net income is expected to increase 25% to $1.63 billion from $1.3 billion.

Costco’s second-quarter results sent Costco shares down nearly 10% in two days in early March as sales rose less than analysts expected, but the stock has since rebounded in the following months, hitting a record high over the past week.

	Analyst estimates for Q3 2024	Q2 2024	Q3 2023
Income	$57.89 billion	$58.44 billion	$53.65 billion
Diluted EPS	$3.67	$3.92	$2.93
Net income	$1.63 billion	$1.74 billion	$1.3 billion

Key indicator: membership

Costco, like other retailers including BJ’s Wholesale Club (BJ) and Walmart’s (WMT) Sam’s Club, uses memberships to provide access to its stores, which helps Costco generate revenue before a shopper enters the store. As of 2017, Costco memberships, which are available in two price tiers, cost $60 per year for Gold Star and Business Memberships and $120 per year for Executive Memberships.

However, in recent quarters, company executives have stated several times that Costco has exceeded the average time it typically takes between membership price increases and suggested it is a matter of “when, not if” membership prices will increase. Investors will likely be watching closely to see whether Costco will provide more details about its membership pricing plans when the company reports earnings.

Analysts expect membership to increase slightly this quarter to 73.55 million, up from 73.4 million last quarter and 69.1 million a year ago.

Business in the spotlight: partnership with Uber Eats, first report with the new CFO

Weeks before Costco’s earnings announcement, its market was potentially boosted by a new partnership with Uber Technologies (UBER), which the ride-sharing company announced at its annual event on May 15.

Costco has experimented with delivery through Uber Eats in test areas such as Texas and already has a partnership with Instacart, which allows members to order items for same-day delivery.

With the new partnership, Uber Eats users will be able to order Costco products through the app whether they are a Costco member or not, which will be a significant step for Costco as it protects the members-only shopping experience by eliminating sharing of memberships all along last year year.

However, Uber said Costco members will receive special discounts, as well as a 20% discount on an annual membership to Uber One, Uber’s subscription service that offers discounted rides and free delivery on Uber Eats orders. During its event, Uber said the service will be available in many markets in the U.S. and several other countries where Costco operates, with plans to expand further.

Thursday will also be Costco’s first earnings report under its new chief financial officer, after previous Kroger (KR) CFO Gary Millerchip took the job last month. Galanti, who has served in the role for nearly 40 years, will remain at Costco as an advisor until January 2025.

Costco shares are up nearly 21% this year, hitting $796.34 at market close on Thursday, May 23, after hitting an intraday high of $808.05 earlier in the session.