Gabbi Shaw/Business Insider
People just can't get enough of Costco — even as membership fees went up.
The wholesale club beat Wall Street's expectations Thursday, posting fiscal first-quarter net sales of $60.99 billion, up 7.5% from the same period last year.
Comparable sales growth of 5.2% was largely driven by increased traffic, as gas price deflation made for nearly flat receipt growth. The company also noted price reductions in some categories, like facial tissue and chicken stock.
"We're pleased with the momentum that we're seeing there, and I think it reflects the fact that our members are willing to spend as inflation comes down," CFO Gary Millerchip told investors on the earnings call.
Traffic growth was also aided by the addition of nearly 10 million new member cardholders since last year, bringing the count to 138.8 million at the end of the period.
Millerchip said revenue from the recent membership fee increase — the first price hike in 7 years — "doesn't have much impact yet" and that US and Canadian members are renewing at a rate of 92.8%.
With respect to potential tariffs, Millerchip said that "tariffs raise costs — that's not something that we see as a positive in general."
Still, he quoted his predecessor Richard Galanti in saying, "When it rains, it rains on everybody."
Millerchip said imported products represent a small percentage of what Costco sells. The company has several options to mitigate the impact of new import fees, he said, including pulling shipments earlier, negotiating with suppliers, or simply reconsidering whether an item is worth including in its assortment.
Shares of Costco were trading roughly flat in after-hours trading following the results.
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