Are Costco Members Still Buying in Bulk?

Costco Wholesale (NASDAQ:COST) shares received a price check as the company reported better-than-expected financial results for the first quarter of fiscal 2013. Despite a hike in membership fees last year, consumers continue to buy in bulk.

How Good Are the Earnings?

Costco reported that net earnings surged 30 percent to $416 million (95 cents per share) for the twelve weeks ended November 25, 2012, compared to $320 million (73 cents per share) for the same period a year earlier.

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The largest membership warehouse club in the United States also announced a 9.6 percent increase in total revenue to $23.7 billion, compared to $21.6 billion last year. Last November, Costco hiked membership fees for the first time in five years by 10 percent in the U.S. and Canada, but revenue from membership fees jumped 14 percent to $511 million in the first quarter, signaling that the price increase did not significantly slow down renewal rates. However, membership growth was slower than the previous quarter.

Excluding inflation in gasoline prices and strengthening foreign currencies, total same-store sales for the quarter increased 6 percent in the U.S. and 7 percent international. The operating margin improved to 2.8 percent, compared to 2.6 percent in the same quarter last year.

Analysts were pleased, but shareholders may be booking profits…