Costco updates corn, flour, sugar and butter costs

The retailer generated $54.44 billion in first-quarter revenues

Costco Wholesale’s revenue and earnings-per-share for the first quarter of fiscal 2023 came in below estimates Thursday, with CFO Richard Galanti giving an update on inflationary pressures. 

"In the first quarter, we estimate the equivalent year-over-year [price] inflation number in the range of 6% to 7%. Food and sundries is still up more than non-foods. But, overall, a little better level than a quarter ago for the company," he said regarding inflation. "And commodity costs are mostly coming down, whether it’s corn, flour, sugar and butter or even some things like steel. A few things are up, but, overall, we’re seeing a little bit of a trend, but we’ll keep you posted."

The retailer said it generated $54.44 billion in total first-quarter revenue, a roughly 7.5% increase from the $50.36 billion reported in the same three-month period last year. For the quarter, its net income widened to $1.36 billion, with its adjusted earnings-per-share coming out to be $3.10. 

Costco Wholesale Retailer

A Costco Wholesale Location. (iStock / iStock)

Analysts had estimated Costco’s revenue would be $54.64 billion and its adjusted EPS would be $3.11, according to Reuters. 

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Costco saw revenue increases from both its net sales and membership fees in the quarter, with its net sales rising about 10% to $53.44 billion. Membership fees generated $1 billion, up from $946 million in last year’s first quarter. 

Costco customer wears mask as she looks through clothing

A shopper wearing a mask looks at clothing for sale inside a Costco store in San Francisco March 3, 2021.  (David Paul Morris/Bloomberg via Getty Images / Getty Images)

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While discussing November sales, Galanti said "big ticket discretionary has a little bit of weakness."

He noted during the call that profits from gas sales have helped Costco "continue to hold prices where we can on some things." Later, he pointed to fresh foods as an example of where the company has "held the price points" on items, including some proteins and baked goods, despite inflation. 

Costco customers check out items

Customers shop for clothing at a Costco store July 13, 2021, in Novato, Calif.  (Justin Sullivan/Getty Images / Getty Images)

He said the company "saw strength in canned protein" last quarter. However, Costco doesn’t "see currently a lot of trade down on fresh," he added. 

While on the call, he also answered analyst questions about whether Costco will raise the price of its membership fees, at one point saying he’d "be coy on when that might be."

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"With the headline being ‘recession question mark and inflation exclamation point,’ there’s no rush. First of all, even if we follow the pattern of the last three (fee hikes) over the last sixteen or so years, they average five years and seven months, and I know now that five years and seven months from June of ‘17 is January of ‘23," he said. "I know on the last call I said that doesn’t mean it’s gonna be January ‘23. It’s a question of when, not if, but at this junction, we’ll just have to wait and see."

Ticker Security Last Change Change %
COST COSTCO WHOLESALE CORP. 517.28 -2.81 -0.54%

He said Costco feels "very good about our member loyalty and our strength."

"If we wanted to do it yesterday, we could, and if we want to do it six months from now, we can," he said. "We’ll wait and see."