Shares of Costco Wholesale (NASDAQ: COST) climbed 6.6% on Friday after the warehouse retailer delivered better-than-expected revenue and profit growth in its fiscal 2022 first quarter.
Costco's net sales surged 16.7% year over year to $49.42 billion, fueled by store openings and robust same-store sales growth. The discount chain's store count expanded to 828 warehouses, up from 803 in the year-ago period.
Meanwhile, Costco's comparable sales, adjusted to exclude fluctuations in gasoline prices and foreign exchange rates, rose 9.8%. The gains were driven by a 6.8% increase in traffic and a 2.5% rise in average transaction price.
Image source: Getty Images.
Moreover, Costco is making progress with its online retail initiatives. Its e-commerce sales grew a solid 13.3%.
Better still, Costco's membership fees increased 9.9% to $946 million. The company continues to do an excellent job of retaining its customers, as evidenced by its 91.6% renewal rate in its key U.S. and Canada markets and 89% worldwide rate.
All told, Costco's net income rose 13.6% to $1.3 billion, or $2.98 per share. That was well above Wall Street's estimates, which had called for earnings per share of $2.64.
Costco's performance is even more impressive considering that the warehouse chain, like many retailers, is facing a host of supply chain-related challenges.
"The factors pressuring supply chains and inflation include port delays, container challenges, COVID disruptions, shortages of varying components, raw materials, ingredients, and even packaging supplies, labor cost pressures, and truck and driver challenges," CFO Richard Galanti said during a conference call with analysts.
To mitigate these supply chain disruptions, Costco is ordering merchandise earlier than normal and storing extra inventory to prevent shortages.
"[We] feel pretty good about staying in stock and continuing to work to mitigate cost and price increases as best we can," Galanti said.
10 stocks we like better than Costco WholesaleWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Costco Wholesale wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of November 10, 2021
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.