Best things come in “BIG” packages!
The place where Americans go to save money, by spending everything they have — Costco — reported another stellar quarterly performance last week.
Costco is also probably the only company in the United States where you can make $45,000 a year on average by pushing carts, rolling hot dogs or working the cash register or where one can eat a hot dog and a soda for just $1.50!
In our very first newsletter a month ago; we discussed Costco’s audacity and it’s penny-pinching style — increasing membership fees and cutting a deal with Visa/Citigroup for a new card.
Both these plans are bearing fruits
Costco has issued 2 million new cards since ditching AmEx a year ago and has transferred 11.4 million co-branded cards representing 7.4 million accounts!
The new membership fees kicks in from tomorrow (June 1st) — a $5 increase for Gold Star and $10 for Executive
One of their secret sauces of success is their in-house brand Kirkland Signature which is performing really well and gives them good margins. There are several items with this brand that easily do $1 billion a year in sales and Costco is the largest seller of Wines in the United States with an eye-popping margin!
The only thing to worry for Costco at this point will be Amazon and its increasing dominance in the retail space as Amazon is taking tens of billions of dollars of retail share annually and consumers increasing preference towards online only retail therapy!
Most of the questions from the analysts during the conference call centered around Costco’s e-commerce strategy and how it plans to take on Amazon!
Amazonian Feat
If devouring Tescos and Walmarts weren’t enough for the e-commerce mammoth, Amazon broke another record yesterday as it traded above $1000 mark.
Amazon’s has been an amazing journey since it went public exactly 20 years ago this month. For those who believed in Jeff Bezos’ vision and hung onto the stock, it’s given a 49,000% gain since then, earning the well-deserved title of a “superstock”!
A s Jason Zweig mentions in his column, Amazon lost about 95% in stock value during the tumultuous dot-com bust era (between 1999–2001) but rose again as a phoenix and today has become a mammoth that is eating the world — and doesn’t give a hoot to Wall St — it offers no guidance and is not even bothered about making a profit for Wall St. sake!
Crunching the numbers
Wall St. folks enjoyed a much deserved long weekend (thanks to Memorial Day holiday) after a very hectic earnings season that meant jumping from one earnings call to another during early mornings hours; reading 100-page reports and burning the midnight oil in working out new models and theories — and you thought their life was easy!
And for those who took an extra day off on Friday; there were a couple of late night earnings releases of note that came in late Thursday.
Revenue of Best Buy inched 1% up to $8.5Bil in 1Q18, as the retail chain’s net earnings from continuing operations slid to $188MM from last year’s $226MM. Earnings from continuing operations fell to $0.60 per diluted share from $0.69 a share, with cost of goods sold jumping to $6.5Bil from $6.3Bil.
Click here to see the AlphaGraphic
Discount retailer $BIG reported higher 1Q17 earnings, driven by lower expenses and higher operating profit. Net income increased 33.24% to $51.52MM or $1.15 per share from $38.65MM or $0.79 per share a year ago. Net sales for the quarter declined 1.2% to $1.29Bil from $1.31Bil in 1Q16. Excluding items, $BIG earned $1.15 per share.
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ULTA Salon reported a 40% increase in 1Q17 profit, helped by higher sales. Net income surged to $128.2MM or $2.05 per share from $92MM or $1.45 per share in the prior year quarter. Sales increased 22.5% to $1.315Bil and comparable sales increased 14.3%.
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