[With Subtitles] Costco Is In Deep, Deep Trouble As CEO Warns About Major Challenges

The current economy is putting many businesses on the brink, and Costco is no exception. Execs seem deeply worried about the company's performance in recent months because sales have been weakening all across the board. Even though buying in bulk can save consumers’ money down the line, for many, shopping in big quantities isn't making financial sense anymore. Faced with higher bills in other categories, such as energy and housing, Americans are foregoing large purchases and preferring to take advantage of sales at traditional retail stores to manage their escalating monthly expenses.

Rivals like Walmart, Amazon, Target, and Aldi are all offering discounts on thousands of products to improve their sales this summer. On the other hand, Costco never offers promotions to its customers, and people must pay membership fees to shop at its stores.

Although that model has been a successful one for the company for many years, consumer patterns are changing right now, and they are having a major impact on Costco's bottom line. That's adding a lot of pressure on the warehouse club as shareholders are being met with disappointing results, which could put the company in huge trouble in the months ahead, according to financial analysts.

This year, Costco's stock already took a beating. Despite its astronomical growth since the pandemic, almost doubling in price, in March, the stock tumbled by 7.6% in a single day as the retail chain missed second-quarter revenue expectations and signaled a negative impact from gasoline prices.

In May, the same occurred as investors observed evidence of a slowdown. So far in 2024, Costco's monthly sales numbers haven't been great, and for nine straight months, they've been below 5%. And while it did look like they were improving in the final months of 2023, in January, they dipped back down to just 3%. This is problematic because Costco's stock trades at 41 times its earnings. At such a high multiple, investors anticipate significant growth. If these figures don't recover swiftly, the stock might experience a substantial drop, as noted by experts in a Motley Fool article.