Costco Q1 Earnings Lower Than Expected

Costco's 12 Days of Christmas Deals promotion

Costco’s 12 Days of Christmas Deals promotion

Issaquah, WA—Costco today reported that a fiscal first quarter profit weaker than expected despite a 5% sales increase. The wholesale club retailer saw its results weighed down by a 7.2% increase in selling, general and administrative expenses as well as lower gas prices, analysts said.

For the quarter ended Nov. 30, Costco posted earnings of 96 cents a share compared with or 95 cents a share a year ago. However, analysts’ average estimate expected $1.02 a share.

Net revenue rose 5% to $25.02 billion barely missing analysts’ estimate for $25.4 billion.

Comparable store sales were 3% including negative impacts from lower gasoline prices and foreign exchange. Excluding the effect of gas prices and foreign currency exchange, comp sales would be 5%. In its first quarter last year, Costco posted a 7% increase in comp store sales.

Noting the companies lower figures than last year, analyst said Costco is pitted against stiff competition, namely Target and Sam’s Club a division of Walmart, which operates under a similar membership-only warehouse club concept.

“Costco sales have been up and down this year and were hurt by falling gas prices,” Ken Perkins, president of Retail Metrics, said.

Costco has missed same-store sales expectations in six of 11 months this year, Perkins noted. “They’ve had real strong sales over the last five years so their comparisons are more difficult.”

 

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com