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Costco Posts Solid Q4; Extra Cargo Ships Reaffirm Supply Chain Ease

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 4 Mar 2022

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Key points:

  • The wholesale giant beat revenue and EPS expectations for Q4 earnings
  • Leasing 4 more cargo ships, Costco aims to circumvent any supply chain issues
  • COST stock gapped 3% down today, trading with a year-on-year gain of 66%

Costco (NASDAQ: COST) are an undisputed giant in low-cost wholesale retail, but that doesn’t mean that when supply chain issues hit global retailers, they weren’t affected. On a similar path to BestBuy, who released earnings yesterday, you might assume that the superstore was plagued with half-empty shelves as the holiday season, unfortunately, coincided with supply difficulties. Yet Costco’s monolithic global imprint meant that disrupting logistical barriers was the first thing on the company’s agenda when faced with delays of merchandise and a lack of critical supplies. 

Looking at Q4 earnings, the company posted an adjusted EPS of $2.92, beating expectations by $0.13. Similarly, the revenue of $51.9B beat expectations by $390M; resulting in total revenue growth of just under 16% year-over-year.

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In the markets, It isn’t surprising to see that, despite a tricky start to the year, COST is back in an uptick and extending year-on-year gains of 66%. Whilst stock gapped slightly down this morning, investors should look forward to a period of effectively navigating supply bottlenecks. 

Whilst the company already leased 3 cargo ships in order to speed up the transportation of Costco merchandise, the Q4 earnings transcript revealed a further 4 vessels for the next 3 years in order to maintain the flow of goods to all 828 global warehouses – circumventing the problem of dwindling shelves. 

In a time when retailers are under extreme pressure to maintain regular supply patterns, it’s refreshing for investors to see Costco covering extra ground in global logistics when bottlenecks are the main thing on investors’ minds. Today’s 3% drop shouldn’t worry buyers, the wholesale giant is still on track for consistent profitability.

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.