Costco missed earnings expectations for its second quarter late Thursday. Rivals BJ's Wholesale Club and Kroger beat earnings estimates early Thursday, with online sales coming in strong for all three retailers.
On Friday, Costco stock slumped, flashing two sell signals. BJ stock and Kroger stock extended Thursday's gains, rallying further above buy points.
The Costco earnings report highlighted "industry-leading comparable sales growth and robust membership metrics," CFRA analyst Arun Sundaram wrote in a note to clients on Friday. The analyst lifted his price target on COST stock by $75 to $1,080. But he trimmed fiscal 2025 and 2026 earnings estimates, "to reflect tariff risks and ongoing wage headwinds."
Costco Earnings, BJ's Earnings, Kroger Earnings
Late Thursday, Costsco reported EPS of $4.02, rising 8% year over year, but missing views for $4.09, FactSet shows. Net sales rose 9.1%, year over year, to $62.53 billion, slightly ahead of views for $62.02 billion. Same-store sales rose 6.8%, edging past views for a 6.4% gain.
E-commerce sales grew 20.9% during the quarter ended Feb. 16, the Costco earnings release showed.
Early Thursday, Kroger posted a 15% decrease earnings decline to $1.14 per share, better than a feared 17% drop to $1.11. Revenue fell 7.4%, year over year, to $34.31 billion, a slight miss. That marked the second straight quarter of revenue declines for the supermarket operator whose chains include Kroger, Ralphs and Dillons.
Kroger highlighted 11% digital sales growth in the fourth quarter and 10% to more than $13 billion for the full year. But its 2025 EPS guidance of $4.60-$4.80 came in below estimates for $4.82.
However, that would mark a return to 7.7% earnings growth for the full year as sales also rebound 1%, FactSet shows.
In fast-growing online grocery sales, Kroger is the No. 3 retailer with an 8.6% share, trailing Walmart at 31.6% and Amazon.com at 22.6%, according to e-Marketer. Americans will spend $220.48 billion buying groceries online in 2025, the firm estimates.
Also early Thursday, Costco rival BJ's Wholesale Club posted a 16% earnings skid to 93 cents per share, better than 88 cents expected. Revenue fell 1.5% to $5.279 billion, ahead of views for $5.266 billion. Same-store sales rose 4.3% vs. views for 3.1%.
Membership fee income came in ahead of views and the company reaffirmed long-term outlook, FactSet shows. E-commerce sales grew 25%, a bright spot. Merchandise margins shrank by 10 basis points.
Walmart, Kroger, Costco and Albertsons are among the nation's biggest grocery retailers, including online and offline. A merger try between Kroger and Albertsons fell apart last year.
Albertsons will be added to the S&P MidCap 400 index on March 11. The supermarket chain will replace Aspen Technology, which is being acquired by Emerson Electric.
Costco Stock, BJ Stock, Kroger Stock
Shares of Costco sank 6.1% in Friday's stock market action. Costco stock triggered two sell signals intraday: undercutting the 50-day / 10-week moving average in heavy volume and round-tripping gains from a recent breakout past 1,008.25, the MarketSurge chart shows.
Kroger shares gained 2% on Thursday and extended gains by 4.6% on Friday. On Thursday, IBD named Kroger as Stock of the Day as it rose into buy range from a recent breakout past 63.59.
Shares of BJ's Wholesale Club soared 12.2% on Thursday and extended gains by about 3% on Friday. BJ stock is well extended from a 100.74 cup-shape buy point, first cleared on Feb. 4.
Albertsons stock rallied for a third straight day after the index inclusion report. ACI stock is now just 1% below a 21.67 cup-with-handle buy point.
On Monday, Albertsons announced a CEO succession plan while affirming its 2024 outlook. On Tuesday, Goldman Sachs resumed coverage of ACI stock with a buy rating, according to TheFly.com.
Target stock rallied on Friday after a four-day slide, which saw shares hit their lowest level since late 2023. The big-box discount retailer reported earnings this week, warning that President Donald Trump's tariffs will hurt both earnings and the consumer sooner than many anticipate. Trump's Mexico tariffs could raise produce prices in coming days, Target CEO Brian Cornell told CNBC.
Shares of Amazon and Walmart continued to fall on Friday. WMT stock slumped further below its 50-day line.
Costco Outlook, Costco Membership Fees
Costco continues to execute well in a challenging and uncertain environment, analysts generally say. They predict a 10% jump in Costco earnings growth for both full-year 2025 and 2026.
On Thursday, Costco reported 78.4 million paid memberships and 140.6 million total cardholders. Membership fees for the second quarter totaled $1.19 billion, up from $1.11 billion a year ago.
Last September, Costco hiked its annual membership fee for the first time since 2017. Management said Thursday that the increase impacted Q2's total fees by 3%.
Both Walmart and Costco turned into big retail winners amid high inflation in the past year.
After Thursday's Costco earnings report, nine analysts raised price targets on shares while two cut, FactSet shows. CFRA's Sundaram said Costco's high-single-digit comparable-sales growth "showcased continued resiliency to the macro pressures impacting most other retailers."
Year to date, Costco stock has gained 5% while the S&P 500 index is down almost 2%.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
