Costco sold more than $100 million worth of gold bars during its first quarter.
Costco Wholesale Corp. wowed analysts during its quarterly earnings call with the announcement that it sold more than $100 million worth of gold bars during its first quarter, ending Nov. 26.
The warehouse club giant started selling 1-ounce gold PAMP Suisse Lady Fortuna Veriscan bars to its members back in September. The gold bars were listed at a price of $2,069.99 an ounce on Dec. 15 on the Costco website. As reported by CNBC, the bars have been so successful that they typically sell out within a few hours after they’re uploaded to Costco’s website. Customers are limited to two bars per membership.
CNBC reported back in September that selling the precious metal is an effective promotion for Costco, one that could appeal to a certain sector of Costco’s shopping clientele. Jonathan Rose, co-founder of Genesis Gold Group, noted that the warehouse club seems to have accelerated its offerings of dried foods and other survivalist goods at a time when worries about the future are running high. For example, the company markets a 150-serving emergency food preparedness kit. Gold meshes with that type of product.
“They’ve done their market research. I think it’s a very clever way to get their name in the news and have some great publicity,” said Rose. “There is definitely a crossover of people living off the land, being self-sufficient, believing in your own currency. That’s the appeal [of] gold as a safe haven as people lose faith in the U.S. dollar.”
JPMorgan is forecasting a breakout rally for the precious metal in 2024, with a peak of $2,300 an ounce as interest rates are expected to fall, according to the bank’s commodities outlook published earlier this month.
The investment bank said gold could retreat to $1,900 an ounce in the coming months, but that would set up investors to position themselves for a midyear rally in 2024.
Gold has definitely boosted Costco’s Q1 e-commerce performance. Online sales in Q1 excluding foreign exchange increased 6.1%, the first quarterly year-over-year increase in five fiscal quarters, and trended well during the three reporting periods of September, October and November. Costco CFO Richard Galanti added that app downloads increased 10% during Q1.
“We completed over 800,000 deliveries, which were up 17% versus the comparable quarter last year,” said Galanti.
Gold bars weren’t the only “wow” items discussed during the Q1 earnings call. “We sold a Babe Ruth autographed index card for $20,000,” noted Galanti, adding that there's a Mickey Mantle autographed 1951 rookie card in nearly perfect condition for last-minute holiday shoppers – available online for $250,000.
Issaquah, Wash.-based Costco currently operates more than 870 warehouses, including 600 in the United States and Puerto Rico and 108 in Canada. The company is No. 3 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG has also named Costco one of its Retailers of the Century.