Jokes aside, though with some ebbs and flows, inflation is not as hot as last year. Sometimes I chuckle to myself thinking that the Fed is waiting for Costco to raise its fees as the unofficial confirmation that inflation has cooled down. It's not a matter of a big time, but we'll let you know as soon as we know. And at some point, we will, but our view right now is that we've got enough levers out there to drive business and we feel that it's incumbent upon us to be that beacon of light to our members in terms of holding them for right now. However, the company stuck to its customer-friendly culture and repeatedly stated it didn't feel it was the right time to raise fees, given the hot inflation reports.Īs the company said during the last earnings callĪt the end of the day with the headline being inflation, we feel very good about if we want to do it, we do it without impacting in any meaningful way renewal rates or sign-ups or anything. Since the last hike was in June 2017, many were expecting a raise already in 2022. In fact, Costco has the habit of increasing them every five to six years. Now, the big news everyone is waiting for is when Costco will raise its membership fees. In fact, it is a stock many investors would want to own, but whose valuation scares away some of them. Having said all that, I believe an investor can't approach Costco's stock without a well thought-out strategy to understand how to give a valuation of this stock. This is one of many reasons why the issue of shoplifting is not hitting Costco as much as other retailers across the U.S. How Amazon Expands Costco's Business ModelĪfter these articles, my research led me to better understand how Costco's warehouses are designed and managed.The Influence of Costco On Amazon Prime.This is where Costco's profitability comes from, providing continuing fee revenue from where about 58% of Costco's net income comes from.Ĭostco's business model is so effective that it has actually been able to inspire Jeff Bezos in changing Amazon's ( AMZN) business model, as I outlined in these two articles: Its hidden asset its customers' loyalty to the membership program.Costco is operated so efficiently that an extra percentage of comparable sales does more to its margins than raising prices on the items it sells. The way to raise margins is by lowering prices and increasing sales. This means it's not focused on harvesting margins on the products it sells. In fact, Costco is anchored to two main pillars: I felt investors were mixing apples with oranges because Costco, though a retailer, r uns a different business model from the other two companies. I started covering Costco when last year, after disappointing earnings from Walmart ( WMT) and Target ( TGT), Costco traded down, too. What should we expect from the upcoming report? In this article, I will share what I consider the main elements to look at to assess the company's performance. However, I have come to see how a couple of times a year, the stock undergoes a sell-off, opening up the chance for investors to initiate or increase a position. In fact, Costco is a stock very difficult to buy at a discount because, more often than not, it often trades at a premium. Clearly, this is not just a quarterly report, but, being Q4, it brings with it a whole fiscal year.Ĭostco's earnings must be watched closely. Costco ( NASDAQ: COST) will report its Q4 2023 earnings at the end of the month. As one earnings season is about to fade away and another is about to unwind, we have a big name yet to report earnings.
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