Costco Members Are Buying Value Meats—And Wagyu Steak

Costco’s higher-earning clientele are cooking at home more often.

Warehouse giant Costco (COST) has noticed some interesting shopping tendencies in a customer base that has been spending more time in the kitchen, CEO Roland Vachris said on an earnings call Thursday. They’re moving toward both ends of the price spectrum, picking up high-end ingredients like Wagyu beef but also comparatively inexpensive alternatives, Vachris said.

“Where we have high-quality premium cuts, they’re selling well. But we’re also seeing a gravitation towards those lower price per pound items,” Vachris said of meat sales, according to a transcript made available by AlphaSense.

Same-store sales came in 5.2% higher than last year in the U.S., Costco said. Produce and meats did particularly well as members ate at home more frequently, executives said.

Costco shoppers are spending when they spot value and fresh merchandise, CFO Gary Millerchip said. The retailer is serving this desire by introducing new private-label offerings and cutting prices on existing items, from chicken stock to sauvignon blanc, he said.

Retailers tend to price their private-label products below competitors. Shoppers have been spending more on Costco’s Kirkland Signature brand, which now accounts for about one-third of Costco’s U.S. food sales, executives said.

“It’s growing a little faster than the rest of the business,” Vachris said.

Costco recorded $1.8 billion in profit during the first-quarter of its fiscal year, up from $1.59 billion a year earlier, the company said. This was the first earnings report that reflects an increase in membership fees, which was instituted in September.