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.”