Olga Prentiss
Dec 15, 2023 - 07:10

Costco stock record high earnings why

Costco shares surge to record high after special dividend announcement. Sales surge on groceries, memberships, and Black Friday. CEO to step down.

Costco has announced a special cash dividend of $15 per share to be paid on Jan. 12, causing its shares to climb over 4% to a record high in intraday trading on Friday. This increase comes after the company reported fiscal first-quarter results that surpassed analysts' expectations, driven by increased consumer demand for Costco's groceries and other products due to their lower prices.

The membership-only retailer reported net sales of $56.72 billion, a 6.1% increase from the same period a year ago, and above analyst estimates. Net income also saw a significant rise, reaching $2.2 billion or $4.86 per share, up from $1.87 billion or $4.20 per share the year before, and surpassing expectations.

The company's growth can be attributed to the rise in memberships and the surge in sales of items like groceries. Costco reported selling more than 4 million pies over the Thanksgiving weekend alone. Additionally, the number of paid household members saw a 7.6% year-over-year increase, while membership fee revenue jumped 8.2% to $1.08 billion.

Costco's Chief Financial Officer, Richard Galanti, highlighted the company's exceptional performance during the Black Friday and Cyber Monday sales days. He also noted the popularity of its gold bars, with Costco shipping $100 million of gold in the quarter.

In addition to these updates, Galanti announced that Costco CEO Craig Jelinek will be stepping down at the end of the year after a decade in charge. He will be succeeded by Ron Vachris, the current chief operating officer, who started as a forklift operator at the firm 40 years ago.

Overall, Costco's shares were up by 4.8% on Friday as of about 12:20 p.m. ET, and have seen a year-to-date gain of more than 45%. This announcement of a special cash dividend, along with the impressive fiscal first-quarter results, has contributed to the company's continued success in the market.