Companies across the retail spectrum have highlighted cuts in discretionary spending by consumers this earnings season.
Costco Wholesale Corp., which reported second-quarter results after market close Thursday, is seeing a pullback in spending on big-ticket items, but analysts say the retail giant still has a compelling story.
Speaking during a conference call to discuss the second-quarter results, Costco CFO Richard Galanti described weakness in big-ticket discretionary items, particularly major appliances, home furnishings, small electronics, jewelry and hardware. “I think it’s a combination of the economy and concerns out there as well as particularly strong numbers that we enjoyed not only a year ago,” he said. “A year prior to that, with COVID, we, of course, benefited in big ways with those big-ticket items.
He continued: “Strong renewal rates and growth in penetration of high-tier memberships and private-label food sales bode well for [Costco’s second-half] performance.” Jefferies has a buy rating for Costco.
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