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However, shares of the warehouse club operator fell about 2% in extended trading as the company’s gross margins dropped by 99 basis points in the third quarter.
The weakness in Costco’s margins come at a time when U.S. retailers, including Walmart (NYSE:WMT), Target (NYSE:TGT), Kohl’s Corp (NYSE:KSS) and Best Buy Co Inc (NYSE:BBY), have warned of decades-high inflation hitting their profits.
Still, an average shopper at Costco earns more than a typical Walmart and Target customer, and the warehouse club operator’s efforts to keep gas prices several cents below the national average has driven memberships and sales.
Costco’s revenue from memberships, which are priced between $60 and $120 per year, rose to $984 million in the quarter from $901 million a year earlier.
The company’s total revenue rose 16% to $52.60 billion in the third quarter ended May 8, compared with analysts’ estimates of $51.71 billion, according to IBES data from Refinitiv.
Excluding items, Costco earned $3.17 per share, topping estimates of $3.03.
