Costco reported a 10.6% year-over-year increase in total sales for June, reaching $29.4 billion, but this fell short of expectations. U.S. comparable sales, excluding gasoline, rose 7.6%, down from 8.7% in May and below Mizuho's forecast of 8% to 9%.
The slowdown in sales growth across all categories contributed to a more than 4% drop in Costco's stock on Thursday, although it remains up 5.5% year-to-date, lagging behind the S&P 500's nearly 10% gain. Analysts, including Jim Cramer, noted that while Costco is performing well, the results were not as strong as previous months, highlighting the tough economic climate affecting consumer spending.
KeyBanc's consumer survey indicated weakened spending intentions and financial confidence, driven by concerns over high food costs and gas prices. Despite the challenges, Costco's ancillary businesses and e-commerce showed strength, with digital sales increasing by 21.5%.
However, the stock's high valuation at 41 times forward earnings raises concerns about future performance, as even a modest 7.6% comp gain may disappoint investors. Membership growth has also slowed, with paid members at 82.9 million, reflecting a 4.1% year-over-year increase. Investors will be closely watching upcoming sales reports and quarterly earnings to gauge Costco's ongoing performance