Costco (COST) is dumping tons of gold bars as the price of the yellow metal continues to soar.
Costco Chief Financial Officer Gary Millerchip told analysts on an earnings call Thursday night that gold sales increased by “double digits” in the most recent quarter. Millerchip went on to add that gold was a “meaningful tailwind” for e-commerce sales in the quarter.
Costco will begin selling gold bars in the fall of 2023. Wells Fargo analysts estimate that Costco sells between $100 million and $200 million in gold bars each month.
Gold’s recent performance sparked a tongue-in-cheek moment as the Costco call nears its end.
Greg Merrick, a veteran Evercore ISI analyst, told executives: “Given its success in non-food areas, I’m just curious: Are there any plans to bring Kirkland Signature into the gold bullion market? ?” he asked.
Kirkland Signature is Costco’s large private label business.
Costco CEO Ron Vacris said there are “no plans at this time.”
Screenshot of gold bars from Costco’s online store. (Yahoo Finance)
The warehouse club gold rush came as metal futures (GC=F) hit a record high of $2,708.70 per ounce during Thursday trading. Gold prices have risen 30% since the beginning of the year, and last week’s decision by the Federal Reserve to cut interest rates by 0.5 percentage points has further boosted the price.
Top gold stocks such as Freeport-McMoRan (FCX) and Barrick Gold (GOLD) rose 22% and 18%, respectively, in 2024.
Costco sells 1 ounce gold bars for $2,679.99 on its website. You must become a member to purchase bullion. It is also non-refundable and has a total limit of 5 units per membership.
Experts suggest Costco’s gold business is likely to remain profitable in the short term.
Ben McMillan, IDX’s chief investment officer, told Yahoo Finance this week that gold had been “dormant” for years as investors sought to de-risk their portfolios, but now said he is firing on all cylinders.
“Gold has historically been associated with very risk-off, very flight-to-safety trades, like hard landings in recessions,” McMillan said.
Despite the big money sales, Costco’s Bread and Butter still sells items like bread and butter to cost-conscious shoppers.
Same-store sales growth for the fiscal fourth quarter was 6.9%, compared to expectations of 6.4%. E-commerce sales rose 19.5%, slightly below the 19.63% growth rate expected by Wall Street.
Sales were driven by growth in electronics, food health and beauty aids, tires, toys, and gift cards, among others.
Costco stock fell 1.5% in premarket trading on Friday.
“Taken together, strong comparable sales and membership growth, as well as solid member retention rates, demonstrate that the company’s value proposition remains attractive, with significant market share across most of the company’s businesses. We expect the recently enacted dues increases to be largely reinvested, resulting in increased sales, revenue and traffic over the next 12 to 18 months. ,” Stifel analyst Mark Astrachan wrote in a client note.
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Astrakan maintained its rating on the stock at “buy.”
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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