Costco (COST) posted fiscal second-quarter earnings results Thursday, March 2, after market close that mostly beat expectations. Shares were down more than 2% after the release.

As consumers sought out value and moved away from discretionary spending, the wholesale retailer saw a slight miss in quarterly revenue, coming in at $55.27 billion, but up 6.5% from a year ago. Meanwhile net sales saw a 6.5% increase, to $54.24 billion, up from $50.04 billion.

Here's what Costco reported, compared to Wall Street estimates, based on Bloomberg consensus data:

• Revenue: $55.27 billion versus $55.58 billion expected

• Adjusted earnings per share: $3.30 versus $3.21 expected

• Same-store sales: up 6.8% versus up 6.16% expected

  • United States: up 5.8% versus up 5.56% expected

  • Canada: up 9.6% versus up 5.51% expected

  • Other international: 9.5% versus up 7.10% expected

"People are spending their dollars where they feel they should be spending them," Costco CFO Richard Galanti said on a call with investors. The retailer saw an increase in sales in the fresh food, food, and sundry categories and "weakness in big ticket discretionary items" with a drop in non-food items such as apparel, jewelry and electronics. This is similar to results from Target (TGT) and Walmart's (WMT) latest earnings.

In the U.S., sales came in slightly lower than expected, up 5.8% compared to estimates of 5.56%. Meanwhile, in Canada and internationally, Costco saw strength with same-store sales, both higher than estimates, up 9.6% and 9.5%, respectively.

Last quarter, e-commerce sales were down 9.6%.

Giving an outlook into the first few weeks of Q3 FY 23, in the first four weeks of February, U.S. sales are up 3.4% and up 1.2% in Canada. For its international business, sales are up 6.5%. E-commerce sales saw a decline of -11.2% in the month of February. Last month, the company saw net sales of $17.06 billion, up 4.7% from $16.29 billion last year.

Its private label business, Kirkland Brands, is also getting a boost from inflation. In the last few months, the company saw "a bigger delta than normal" to Kirkland Brands. For Q2, the company saw a roughly 1.5% increase in sales of Kirkland Brands, specifically food penetration, compared to roughly 0.5% typically. Galanti jokingly called it a "trade-up," adding, "People are looking to save money, and it's our brand, that's great, creates loyalty."

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Membership fee increase?

In the call with investors, Galanti reiterated, similar to previous quarters, "It's a question of when, not-if," it will raise prices. He then referred to its typical time line of membership fee increases, which is every 5 years and seven months, bringing the next potential hike to ... now.