Costco planning to expand in U.S. and overseas over next 10 years

Costco Wholesale (COST) beat estimates on both the top and bottom lines for its fourth quarter earnings. The company is also planning on expanding in the United States and internationally over the next ten years.

Yahoo Finance Live discusses some of the challenges Costco is facing. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

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AKIKO FUJITA: We are watching shares of Costco rising. Now after initially falling in extended trading, the company beat expectations in its fourth quarter earnings report and reiterated plans to expand its footprint. CFO Richard Galanti saying in the company's earnings call that over the next 10 years that could easily add another 150 locations in the US alone.

Costco is certainly moving aggressively there to expand on that front. Rachelle, in many ways, we look to see Costco as sort of a bellwether about where consumers are. We have seen consumers increasingly seek out value, Costco competing on that level. But we also heard from the company yesterday talking about how while consumers are coming through, the amount they're paying in terms of visits or the amount purchased per visit is declining slightly. And also they are seeing a pullback like many other retailers on discretionary spending.

RACHELLE AKUFFO: And I think it's interesting that when you think of Costco, you already have a higher barrier to entry if you're a consumer. I mean, you're already paying a membership fee. For any other sort of grocery store, you don't have to do that. So you already have that hurdle.

And we did actually see the stock price decline at first when Costco said they're not going to be increasing that membership fee. But investors still holding on to that hope that at some point they'll also see that membership fee increase as well. I mean, and when you think of the expansion and where consumers are at the moment, trying to pinch pennies, but Costco is still aggressively going ahead.

I mean, it really shows that they do have some faith in the consumer, especially as they expand overseas. I remember when Costco didn't exist in the UK, and they literally came in like gangbusters and literally became the talk of the town and really outpaced a lot of these big box retailers there. So it'll be interesting to see just how successful Costco can be as we are still in a very high inflationary environment.

AKIKO FUJITA: I am a loyal Costco card member I should say.

RACHELLE AKUFFO: We have to leave it there. But we still-- see. And I am too. But I got to say, it's for a few things that I go for. Like, I mean, I don't always need a canoe when I'm going to Costco.

AKIKO FUJITA: Well, also, we all don't have a fridge that can fit everything, right? That's in bulk. That's the biggest problem for me. I just can't buy everything because I don't have a place that's big enough.

RACHELLE AKUFFO: It's true. You've got to be choosy when it comes to your Costco shopping.