Retail: Costco earnings miss, Walmart's shareholder meeting expectations

Yahoo Finance food reporter Brooke DiPalma details the biggest takeaways from Costco's recent earnings miss and what to expect from Walmart's annual shareholders meeting, including the chain's unveiling of its first-ever market fulfillment center in Arkansas.

Video transcript

AKIKO FUJITA: We are watching shares of Costco after-hours. Big swings after missing third quarter earnings estimates. Yahoo Finance's Brooke DiPalma has a closer look at the numbers. Pretty muted reaction here, Brooke.

BROOKE DIPALMA: Yeah, pretty muted reaction we saw after market trading, go down about 2% to 3%. But now largely flat here, but certainly giving us some color on how this consumer is doing as inflation continues to take a toll on consumers' wallets. We saw same store sales coming up 0.3%. US same store sales come in lower, down 0.1%. Canada down as well. And international growth, where Costco continues to make a big play and certainly try to boost its presence. They're coming higher, up 4/10 of a percent.

Now, largely what we've been seeing lately as consumers switch to food and staples and move away from discretionary items, perhaps this a reflection of that, as noted in their April sales results. But in addition to that, we're also seeing Costco emphasize e-commerce sales, as they continue to make a play there. We do know that e-commerce sales dropped about 10% in the latest quarter.

And in addition to that, also membership fees, something that analysts in the Street are watching closely. What we know is that membership fees are roughly changed or increased about every five years. They were last increased in June of 2017. And that would bring this next increase to right about now, 2023, while analysts on the Street are saying that they do, in fact, expect an increase soon.

There was nothing in the release that indicate, of course, we have the call in just a few minutes. But what we do know is that those membership fees that are about 60 to 120, depending upon which one rose to $1.04 billion. And that's up from 9.8-- sorry, 984 billion last year, a year ago. And so largely, the Wall Street as well as Main Street looking for a key, a closer look at, you know, just as they do increase those membership fees.

AKIKO FUJITA: OK. Brooke, saying on retail, Walmart's annual shareholders' meeting quickly approaching. Know you're heading out there. What can we expect to hear from the retailer?

BROOKE DIPALMA: You know, I'm not alone. And the only person heading out there, there are thousands of people who are gathering in Bentonville, Arkansas next week. And here are three key focus that the Street as well as associates are looking for updates on at Walmart really looking to tout automation, their alternative businesses like ad revenue, as well as the new market fulfillment center that they announced this week.

Diving into that, what we know is that earlier this year and beginning of April, they did announce that they're investing heavily in automation. They said, by the year end of fiscal year 2026, it aims to have about 65% of its stores serviced by automation. So, of course, AI being a key word this earnings season. We certainly expect to see more there, as well as their alternate business, as the company looks to compete with Amazon.

And the market fulfillment center, this is the first one ever. We're going to get a closer inside look at what exactly that fulfillment center looks like, attached to [? Azure, ?] as once again, they continue to compete with Amazon, especially online.

AKIKO FUJITA: OK. We'll be looking out for your coverage. Brooke DiPalma, thanks so much for that.