Eitan Gerstman, CPA on LinkedIn: Costco selling as much as $200 million in gold bars monthly, Wells Fargo… (2024)

Gold has turned into money forCostco, where yellow metal sales begun last year have turned into a cash cow for the big-box retailer.In fact, sales are so brisk that analysts atWells Fargoexpect revenue “may now be running at” $100 million to $200 million a month, a rapid acceleration since bullion hit the warehouse club late in the summer of 2023.“Our work suggests there has been significant interest given COST’s aggressive pricing and high level of customer trust,” Edward Kelly, an equity analyst at the bank, said in a note to clients Tuesday. “The accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST’s robust monthly eComm sales suggests a sharp uptick in momentum since the launch.”If Kelly’s assessment is correct, that would represent quite a move for a product that onlydebuted last Augustand generated about$100 million in salesin Costco’s fiscal first quarter that ended in late November 2023.Costco is selling 1-ounce bars made of nearly pure 24-karat gold. While the price is not disclosed online to nonmembers, it’s estimated that the product generally sells for about 2% above the spot price, which as of Tuesday morning was around $2,357 an ounce. That would put the price at Costco just more than $2,400.Gold has been on a tear this year, withspot pricesrising more than 13% in 2024, pushed higher by a persistent bout of inflation that started in 2022 and investor fear over the state of the deteriorating U.S. fiscal situation.

Never to be outdone by other retailers, Costco Wholesale began selling #goldbars in September 2023. But is it worth it to buy gold from #Costco? Cheapism.com's Alina Wang shares everything you need to know. #investments #preciousmetals #money #gold #cheapism https://lnkd.in/eDHS5zjb

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PAMP It: Costco Selling Up To $200 Million In Gold Bars Per Month, Wells Fargo EstimatesLast December, wholesale retailer Costco announced that they had sold over$100 millionworth of gold in Q3 2023."You've probably read about the fact that we're selling one-ounce gold bars. We sold over $100 million of gold during the quarter," sad CFO Richard Galenti.Now, Wells Fargo estimates thatCostco "may now be running at" $100 million to $200 millionper monthin gold sales."Our work suggeststhere has been significant interest given COST’s aggressive pricingand high level of customer trust," said analyst Edward Kelly in a Tuesday note to clients. "The accelerating frequency of Reddit posts, quick on-line sell-outs of product, and COST’s robust monthly eComm salessuggests a sharp uptick in momentum since the launch,"CNBCreports.Costco is selling one-ounce bars made of nearly pure 24-karat gold. While the price is not disclosed online to nonmembers,it’s estimated that the product generally sells for about 2% above the spot price, which as of Tuesday morning was around $2,357 an ounce. That would put the price at Costco just over $2,400.Sales of Costco gold bars are now limited tofive per customer(up from two), while executive members receive 2% back. Those who use their Citigroup credit cards will receive a further 2%."Pricing at that level and shipping costs suggests it’s a very low profit business at best," wrote Kelly.Spot prices for gold have notably been on a tear this year, rising over 13% YTD amid persistent inflation, nearly $35 trillion in national debt (and growing), and investor fears over the state of the 'deteriorating US fiscal situation,' according to the report.According to DataTrek co-founder Nicholas Colas, "The move suggests that many foreign governments feel the need to hedge geopolitical outcomes that might be negative catalysts for other risk assets like stocks.""The only good news is that this reinforces the idea of gold as a reasonable hedge for diversified portfolios," he added.

"SHRINKFLATION STRATEGY: FOR HOW LONG?"Costco Wholesale saw same-store sales increase in April, reversing March’s decline. Costco‘s comparable-store sales rose 1.4% in April, up from March’s 1.1% decline. Comparable-store sales rose across all of the company’s geographic segments, including the U.S., Canada, and other international markets. E-commerce comparable-store sales saw a 5.9% decline.Excluding changes in gasoline prices and foreign exchange, same-store sales increased 4.3%. In March, they were up 2.6%.Food and sundries performed best in April, Costco said, while nonfood categories lagged behind. The weakest categories were home furnishings, consumer electronics, and jewelry, the company said.Despite the improvement in same-store sales, worldwide average transactions fell 3.6%, the company said. And indeed, net sales of $17.9 billion were below last month’s $21.7 billion, even though they jumped 3% from the prior year.Some of that decrease was tied to negative foreign exchange rates and lower gas prices, Costco said. The average price for a gallon of gas worldwide fell about 11% compared with last April.#INVESTMENTBANKING #HEDGEFUNDS #PORTFOLIOMANAGMENT #CEOS #CIOS #CFO #CFOS #CIO #ASSETMANAGEMENT #FED #INFLATION #ECONOMY #EUROPE #ASIAPACIFIC #MARKETS #COMMODITIES #ECONOMICS #PRIVATEEQUITY #MONEY #VENTURECAPITAL #INVESTING #BANKINGINDUSTRY #TREASURY

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Shares in Costco Wholesale nudged 0.6% higher in pre-market trading after it reported strong sales figures in December.The Seattle, Washington-based membership-only retailer said net sales increased 9.9% to $26.15 billion in the five weeks to December 31 from $23.80 billion a year prior.For the 17 weeks ended December 31, net sales rose 5.9% to $82.86 billion from $78.26 billion compared to the 17 weeks ended December 25, 2022.Like-for-like sales in the five weeks to December 31 rose 8.5% year-on-year, with a 7.3% jump in the US and 13% growth in Canada.#NASDAQ #COST More at #Proactive #ProactiveInvestors http://ow.ly/NpWm1057W8T

Costco is selling an estimated $100-200m/month in GOLD BARS. And they're losing millions doing it. Here are 6 key takeaways: 1️⃣ It's a huge disruption to a legacy industry 🏦 The precious metal industry is dominated by big players like Kitco, JM, Apmex, and a handful of others - plus thousands of small local coin shops. Major retailers don't mess with it because, frankly, the margins are crap (and the prices change every minute! Fun!) 2️⃣ They're radically dropping the price* of gold 💰 By price, I mean premium - the amount dealers charge over the spot price of gold (which changes constantly, similar to stock price values). APMEX and JM routinely charge $70~$100 over spot for a premium 1oz gold coin or bar. #Costco has been averaging just $30 over spot3️⃣ Their revenue is rocketing 🚀 Wells Fargo analysts noted that Costco's foray into #gold may be boosting total comps by around 1% and general merch sales by as much as 3%. What other major retailer can boost sales by 1-3% by adding a single product line? 4️⃣ They accept credit cards 💳 This is huge. Costco accepts #creditcards with no surcharge - something no other #bullion dealer would ever consider (Apmex charges around 4% extra, or $100 extra per oz, to use a credit card). Costco has wild pricing power with CC processing fees due to their exclusive deal with Citi and Visa (they reportedly pay around 0.4%, compared to 1.5-3% paid by other merchants), but they also accept other non-Visa credit cards online. On the consumer side, this also means people can earn CC rewards buying gold. Neat! 5️⃣ Their margins are microscopic 🔬 Let's assume Costco is sourcing gold at spot price - I highly doubt they've secured a deal for less. With gold at ~$2300, Costco may be selling bars at ~$2,330. So $30 "profit", or 1.3%. But shipping is free - overnight, signature required, insured - let's call it $10, conservatively. Processing fees are at least $9 (Visa sweetheart deal). Leaving just $11 of "profit", before any labor or overhead costs - or 0.4% margins 😐 6️⃣ They're almost certainly losing money 💸 Those $11 in juicy profits? SEE YA - Executive Members earn 2% back on all purchases (yes, even gold). That's $46 per bar (less, since it's store credit, but you get the point). Plus, Costco accepts non-Visa credit cards (online only), meaning they're paying far more than 0.4% on some transactions. That could be $35 per bar, conservatively (~1.5% CC fees). And of course, labor and overhead (no idea - $5?) That could be as much as ~$85 per bar, which would mean up to a $74 LOSS per oz sold, or a margin of -3.1%. Given an estimated $100-$200mm in sales monthly, that could be losses of $3.1-$6.2m per month if each bar was sold at these "nightmare conditions" (which isn't the case, but bear with me). So... WTF is Costco doing? Drop a comment with your thoughts 👇 Sources: Neils Christensen via Kitco News, Wells Fargo report, Costco public data

🛍️ Avid Costco Wholesale shopper, and I’ve anecdotally noticed more sales. Today’s Costco report explained why - they highlighted the recent downturn in same-store sales – especially in Canada 🍁In March, U.S. sales fell by 1.5%, but Canada saw a more significant 2.4% decrease 😮💸 Consumers appear to be tightening their belts, with smaller purchases being made in response to economic uncertaintyDiscretionary items are taking a hit, as evidenced by lower sales in home furnishings, toys, seasonal products, jewelry, and ancillary sales 📉🇨🇦 This bigger drop in Canadian sales is an important reflection of our #economy and could signal a potential recession on the horizon amidst our current tightening cycle ⚠️🌐 Costco's e-commerce sales also reported a 12.7% slide, further emphasizing the cautious spending behavior 💻Will be interesting to see what April’s CPI numbers show 💼https://lnkd.in/ga7DQkQ5#Economy #canadianeconomy #recession

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The “Rule of 100” may be an effective sales tactic but it didn’t work for the latest #costco offer. Here’s why.While saving $50 on a $200, same-day delivery order (pictured) got my attention, there were three flaws in the Costco Wholesale promotion:1) The ol’ #instacart mark-up slowly eroded much of the savings2) The eligible product selection was narrow compared to what’s available on Costco’s main website, and3) The realization that $50 off on a $200 purchase only equates to a 25% discount It’s the last element of the #ruleof100 that retailers hope consumers don’t catch on to when pushing a high-spend offer. But, the reality is there are a growing number of savvy #customers who are scrutinizing every deal, especially with #inflation and #affordability top of mind.Is this the end of the “Rule of 100”? Probably not. But if you are considering a similar tactic in the future, there are lessons to be learned that could make your promotion more successful.Jonah Berger David Aaker Pierre Riel

Costco Wholesale Corporation (NASDAQ:COST)stock rose 1.2% in extended #trading after the company’s first-quarter sales topped expectations.The bulk retailer posted revenue of $57.8 billion, up 6.2% year over year and above expectations of $57.72 billion. Membership fee revenue increased 8.2% to $1.08 billion.Net income was $3.58 per share, compared to $3.07 per share a year earlier.Total adjusted comparable sales rose 3.9%, while e-commerce comparable sales increased 6.1%. US comparable sales climbed 2.6%, compared to 8.2% in Canada and 7.1% internationally.#Costco currently operates 871 warehouses, including 600 in the US. More at #Proactive #ProactiveInvestors #NASDAQ #COST #CostcoWholesale http://ow.ly/Pq0N1055Kzs

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GOLD BARS available for purchase periodically on Costco website. Costco Wholesale you out did yourself, from coffins to gold bars, nothing is off limits.💡Will you buy gold online with Costco?“They seem pretty competitive with other bullion dealers,” says the 62-year-old Williams (Customer). “And the shipping is free.”While he doesn’t expect to routinely buy gold bars at the big-box retailer, Williams is now among a vocal number of Costco fanatics and gold buyers who have flocked to the retailer’s website over the past year when it periodically puts up limited quantities of gold bars for sale…Galanti (CFO) said in Costco’s fiscal first-quarter earnings call Dec. 14 that the company sold over $100 million in gold during the quarter."Seems like a good deal.#business #investment #finance

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