Membership-only discount retailer Costco (NASDAQ:COST) reported revenue ahead of Wall Street's expectations in Q1 CY2025, with sales up 9% year on year to $63.72 billion. Its GAAP profit of $4.02 per share was 2.1% below analysts' consensus estimates.
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Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers-with annual sales in the tens to hundreds of billions of dollars-are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
A company's long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $264.1 billion in revenue over the past 12 months, Costco is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.
As you can see below, Costco's 10.2% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was decent as it opened new stores and increased sales at existing, established locations.
This quarter, Costco reported year-on-year revenue growth of 9%, and its $63.72 billion of revenue exceeded Wall Street's estimates by 1.1%.
Looking ahead, sell-side analysts expect revenue to grow 6.5% over the next 12 months, a deceleration versus the last six years. We still think its growth trajectory is attractive given its scale and indicates the market is baking in success for its products.