After Costco’s gold bars went semi-viral, the wholesaler’s latest discounted offering has caught Oppenheimer’s attention. According to analyst Rupesh Parikh, the investment firm first found brands like DoorDash, Instacart and Uber among the discounted in-store gift cards during a store check. He said it stands out as a perk that can keep customers engaged — even as they become pickier about where they shop and spend their money. “We continue to see improvements in the quality of COST’s treasure hunt, from stronger brands in the apparel/consumer durables space to a more extensive assortment of discounted in-store gift cards,” Parikh told clients. “Against the mixed discretionary backdrop of late, we believe this has contributed to a meaningful improvement in non-grocery category trends and the company’s outstanding performance.” The three companies’ gift cards sell for $79.99 in $100 denominations, a discount of about 20%. While he called these additions to the gift card offering “attractive,” the analyst said he’s not sure how long they will stay on offer. Costco has long offered gift cards at a discounted rate for other brands. But Parikh pointed out that the new stores are part of a broader effort to improve non-food offerings, which includes putting popular products like Nike clothing, Hydro Flask water bottles and Dyson hair care devices on shelves. That category also includes gold bullion, which Wells Fargo said accounted for as much as $200 million in monthly sales in April. The work on that front appears to be paying off, as Parikh noted that Costco’s non-food business grew in both June and July. He said that momentum should continue going forward. This also comes after the Washington-based big-box retailer announced last month that it would increase membership fees in the U.S. and Canada. The annual basic membership will increase by $5, while the higher-end “Executive” plan will increase by $10. Costco shares have risen more than 37% this year, building on the nearly 45% rise in 2023. But the average analyst surveyed by LSEG expects a pullback after that big increase, with the price target reflecting about 1.5% downside. Still, the majority of analysts rate the stock a buy. Parikh said investors should buy on dips. He noted that a stock split is among the possible catalysts in the future, he said.
After the success with gold bars, Costco could have another winner: gift cards
