September 26 (Reuters) - As customers rushed to Costco Wholesale (COST.O) for cheaper groceries and other necessities, the retailer exceeded market projections for quarterly revenue and earnings on Tuesday
This helped offset the weak demand for expensive discretionary items. Due to its extremely low prices for necessities and devoted member base,
the membership-only shop has experienced strong sales growth, increasing its market share even in the face of a challenging economic environment.
Strong sales gains in consumables like fresh foods and confectionery have supported Costco, while its low gas costs have drawn in more members, despite the effect on demand for discretionary items like sporting goods and housewares.
By the conclusion of the reporting quarter, the company's total paid household membership had increased by roughly 8%, and its membership fee revenue had increased by 13.7% to $1.51 billion.
During a post-earnings call, CFO Richard Galanti stated, "Traffic continues to do very well...and our renewal rates continue to be very strong,"
adding that sales of toys, Christmas trees, and seasonal décor had gotten off to a good start.
However, in extended trading, the company's shares fell by about 2%. Senior analyst Zak Stambor of Insider Intelligence noted that the market is "incredibly worried" as investors struggle with rising interest rates.