Costco’s third-quarter earnings topped all key metrics after shares closed at an all-time high

Costco ( COST ) posted another massive quarter as consumers look for wallet-friendly prices on everyday items.

As of Thursday afternoon, the company reported net sales of $58.52 billion, compared to estimates of $57.98 billion. The company’s adjusted earnings of $3.78 also beat estimates of $3.70.

“We’re definitely winning on consumables as we see the grocery and dining-out industry calming down a little bit,” CEO Ron Vachris, who took over in January, said on a call with investors.

Same-store sales, excluding fuel, increased 6.5%, led by growing international business (up 8.5%), Canada (up 7.4%) and the United States (up 6%).

This happens when consumers look for value in food items. According to the U.S. Bureau of Labor Statistics, grocery prices rose 1.1% in April from a year ago but fell 0.2% from March.

As inflation eases, consumers are returning to discretionary items, “led by toys, tires, lawn and garden and health and beauty products,” Chief Financial Officer Gary Millerchip said on the call.

Costco shares fell about 2% in pre-market trading on Friday.

The wholesale retailer saw year-over-year foot traffic growth this quarter, beating out stores like Sam’s Club (WMT) and BJ’s Wholesale Club (BJ), according to Placer.ai.

Vachris said Costco won’t have to make sweeping price cuts like Target and Walmart to compete for customers.

“Buyers (for the company) are updated on prices every day, every week, and we all review them every month, so we feel very good about where we are today and our runway can continue to be as competitive as we go forward,” he said.

Costco has lowered prices on some of its private label products, such as Kirkland Signature Pine Nuts and Kirkland Signature Frozen Shrimp Skewers.

E-commerce is another bright spot with growth of 20.7%, with Millerchip saying “the main drivers are gold and silver bullion, gift cards and home appliances.” New app downloads increased by 32% to 35 million.

The company has also expanded its partnership with Uber Grocery in the US and Canada.

In its logistics business, deliveries increased by 28% year-on-year. This delivery company competes with Best Buy (BBY) and offers products such as televisions, computers, appliances, tires and even mattresses.

Costco is piloting a program to offer warehouse inventory online, but Vachris says the company intends to maintain the experience it offers in brick-and-mortar stores.

Membership dues, the main source of revenue, were in line with estimates at $1.12 billion, up 7.6% from last year. Costco Gold Star Membership is $60 per year and Executive Membership is $120. Some on the street predicted last year that Costco would raise its fees this summer.

The story continues

In the third quarter, the company had 74.5 million total paid members and 34.5 million executives.

When an analyst asked whether this would result in higher fees, Millerchip said it was “still a question of if we raise the fee, not if we raise it.”

Offering advertising solutions could be an opportunity given Costco’s access to member data. In its latest quarterly results, Walmart Connect, the U.S. retail media division, reported a 26% increase in sales.

Costco shares are up 25% year-to-date, outpacing the S&P 500 (^GSPC)’s 10% gain, and hit record highs ahead of the release of fiscal third-quarter earnings. After the report, the company’s shares fell by almost 2% at the beginning of Friday’s session.

“We continue to believe a premium valuation is warranted given Costco’s excellent global unit growth prospects, leading competitive position and track record of increasing share earnings,” Oppenheimer analyst Rupesh Parikh wrote in a note to clients ahead of the report’s release, adding that “management may unlock even greater shareholder value over time by creating alternative revenue streams.”

JPMorgan analyst Christopher Horvers wrote that the company’s stock continues to benefit from a base of higher-income customers as well as a long history of steady market share growth.

Earnings summary:

Here’s what Costco released in its fiscal third quarter financial results, compared to Wall Street estimates:

Net sales: $58.52 billion down from $57.98 billion

Adjusted EPS: $3.78 down from $3.70

Total company comparable sales, excluding fuel: 6.5% compared to 5.93%

• U.S. same-store sales growth: 6% vs. 5.51%

• Canadian same-store sales growth: 7.4% vs. 6.96%

• Other international: 8.5% vs. 7.46%

Development of e-commerce: 20.7% compared to 11.5%

Membership fees: $1.12 billion down from $1.12 billion

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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or email her at [email protected].

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