Costco Q4 Earnings Spotlight: EPS Beat, Revenue Beat, Comparable Sales Climb, What Investors Need To Know

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00:00 Costco Wholesales Q4 EPS $4.86 beats the $4.79 estimate. Sales of $78.93 billion beat the

00:10 $77.9 billion estimate. Net sales for 17 weeks were up 9.4% and for 16 weeks of Q4, total

00:19 revenue of $78.939 billion. The Costco Wholesale Executive said that traffic or shopping frequency

00:27 was up 5.2% worldwide. Q4 average transaction was down 3.9% worldwide, down 4.5% in the

00:39 U.S. This is due to weak big ticket discretionary demand, gas price deflation, and that was

00:47 said on the conference call.

00:54 Big things, big ticket discretionary demand, gas price, these things are definitely affecting.

01:01 The earnings were fine. Again, Costco gets hit because this thing we've been talking

01:05 about for the last few days, they are coming for the leaders, folks. Don't think your stocks

01:10 are safe because they're Costco and everybody goes there. I believe they're going to continue

01:14 to come for the leaders here. Costco is not sold off at all. It's near the highs. I think

01:18 Walmart is next. I think they're going to eventually come for the leaders here.

01:23 This report was fine. Expectations are simply too high for Costco. This is one of the only

01:29 stocks that has held on to all of its gains from June, July, and August. It's held on

01:33 to all of them. We are 480, we're 560. We're basically up near the three-month highs. There's

01:37 no stocks that are up there anymore. It's just buyer exhaustion on anything like that.

01:43 They're not looking to go buy highs on stocks right now because that hasn't been working.

01:48 Here you come in, did they buy the dip on Costco? It was a fine report. The information

01:53 wasn't like, "Oh my gosh, it's going bad at Costco here. We better hit the stock." It's

01:57 just buyer exhaustion at Costco. I think it needs to come in a bit. Retail has been hammered

02:02 and Costco and Walmart are just not even touched. I think there needs to be some type of reversion

02:08 to the mean on all of these stocks. I mean, Costco, Walmart coming down and maybe some

02:12 of the other retail getting a little bit of a relief pop. Because you know what? At the

02:16 end of the day, we can think, "Yeah, it's going to be Amazon, Costco, and Walmart."

02:19 There's going to be other retailers. I'm not talking about Nordstrom. I'm not talking about

02:23 Macy's maybe. Macy's is down again here today. But there's going to be other retailers that

02:27 survive. I just don't think it's all going to be Costco, Walmart, and Amazon.

02:32 I've got a couple of technicals. One, we talked about on the closing print, the 540 area,

02:41 that's for the dip, at least off the earnings. You had a couple of lows in that area at 539.18.

02:48 So that's important for that to hold. And on the upside, can you see the bottom of yesterday's

02:53 range? That's going to be pretty tough, I think, at 552. So we'll see if they buy it

02:58 up. But that's for resistance. Fundamentally, a couple of things about Costco. Number one

03:06 is you got to be a member. So they have the membership. So what that does is it generates

03:15 some stable income unless they lose a lot of members. And second of all, I don't know

03:22 what their theft is and how much stuff. First of all, it's hard to walk out with a big thing

03:28 of steaks or something like that. So they probably have less shrinkage from stealing.

03:35 They said it's not an issue at all. On the conference call, they said it was not an issue

03:39 at all. It's not up at all. I think it is hard to walk out into a Costco. I mean, it's

03:44 a matter of, and this is a conversation with the target here too, Mitch, which you can

03:48 give that news too. Maybe we might as well give that right now. It's just another conversation

03:52 here. Target's trading down here with Costco earnings, but it's official. They are closing

03:56 some stores.

03:57 Yeah. Target shuttering nine stores amid rising retail crime. And we also got news of this

04:04 with Best Buy's earnings. They also said very similar to Costco, but what did they said?

04:11 Well, one of the things that helps Best Buy and Costco, I think, is that it's only one

04:16 entrance and one exit. So of course there's emergency exits, but when you're going in

04:23 and out of the store, you're going through that one entrance. And this is what actually

04:27 hurts stores like Target, like Walmart that have nine different doors that you can go

04:34 in and out of. So you can't just be checking everybody through that one exit. So that's

04:41 what Best Buy mentioned on their earnings. Target shuttering nine stores because of retail

04:47 crime. Well, stores need to start adjusting how they're even built so that they can consider

04:53 retail crime. I think things like this is what we're going to start seeing.

04:56 I mean, Target tried to address this, though, in their San Francisco stores. They put every

05:01 single thing behind lock and key. So you go in there and I don't know if you've seen

05:05 these stores, but there's pictures of them on the Internet and you actually have to tell

05:08 the clerk what you want and then they go get it for you. Like labor intensive, just craziness.

05:13 Like they've tried to address it. I mean, when you have this organized crime, they're

05:17 coming in there and it isn't... I forget what they said. It's to the tune of like,

05:24 what was it, like $500 million worth of goods got stolen from their stores or something

05:29 like that. Something crazy. So like crazy amount of money getting stolen. And again,

05:35 I think it just goes back to you've got to punish people who steal. And we got to the

05:41 point where they made a petty theft because people are starving and I get that part of

05:46 it, but the organized crime is taking over. This isn't somebody going and stealing a loaf

05:50 of bread because they're hungry. This is organized crime stealing major stuff. So we've got to

05:56 get a handle on this folks. This is just not America. This should not be happening in North

06:00 America. None of this stuff. And they've got to have to get stiffer punishments for crime.

06:05 They've got to figure this out or we're going to see more store closures.

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