(Reuters) – Costco Wholesale missed market expectations for fourth-quarter earnings on Thursday. Budget-conscious customers spent cautiously at its member-only stores, as well as the impact of lower gasoline prices.
Shares of the company fell about 1% in extended trading. They have received about 37% so far this year.
While extremely low prices for groceries and other kitchen items boosted demand for essentials, consumer spending on big-ticket items such as furniture, home and sporting goods hurt sales at Costco’s warehouses.
The company caters to demand for expensive items such as patio furniture and back-to-school shopping for items such as tablets and other electronics during the summer.
“As inflation cools and interest rates fall, Costco’s relatively affluent member base will be prime to return to discretionary spending,” said eMarketer analyst Sky Canaves.
The membership warehouse retailer’s same-store sales have also been hit by low gasoline prices, which have squeezed their margins. They grew 5.4% in the reporting period ended September 1, compared with a 6.6% rise in the third quarter.
The company’s comparable sales, excluding gasoline, rose 5.4%, below estimates of a 6.4% rise, according to LSEG data.
In July, the company said it would raise its annual membership fees from $5 to $65 for “Gold Star” members and from $120 to $130 for executive members. The price hike is effective from September 1.
Costco’s fourth-quarter revenue rose nearly 1% to $79.70 billion, falling short of analysts’ average estimate of $79.97 billion.
The company’s quarterly revenue from membership was $1.51 billion, compared to a year earlier.
Costco’s net income rose to $2.35 billion, or $5.29 per share, from $2.16 billion, or $4.86 per share, a year earlier, according to LSEG data.
(Reporting by Juveria Tapassum; Editing by Alan Barona)
2024-09-27 01:49:55