Costco Members Are Buying Value Meats—And Wagyu Steak | Global News Avenue

Costco’s higher-income customers cook at home more often.

Warehousing giant Costco (costChief Executive Roland Vachris said on an earnings call Thursday that the company is noticing some interesting shopping trends among customers who are spending more time in the kitchen. Wacris said they are moving toward both ends of the price spectrum, opting for higher-end ingredients like Wagyu beef but also choosing less expensive alternatives.

“Wherever we have high-quality premium cuts, they’re selling well,” Vacris said of meat sales, according to a note provided by AlphaSense. “But we’re also seeing lower prices per pound. The attractiveness of the product.”

Costco said U.S. same-store sales increased 5.2% compared with last year. Executives said produce and meat performed particularly well as members ate at home more frequently.

Costco shoppers spend when they find value and fresh merchandise, said Costco Chief Financial Officer Gary Millerchip. The retailer is meeting that desire by launching new private-label products and lowering prices on existing items, from chicken soup to sauvignon blanc, he said.

Retailers tend to price private label products lower than their competitors. Executives say shoppers are spending more on Costco’s Kirkland Signature brand, which now accounts for about a third of Costco’s U.S. food sales.

“It’s growing a little faster than other businesses,” Vaklis said.

Costco said its fiscal first-quarter profit was $1.8 billion, up from $1.59 billion a year earlier. This is First earnings report reflecting increased membership fee, which came into effect in September.