Costco Wholesale
‘s fiscal third-quarter earnings and sales fell short of expectations.
Costco
(ticker: COST) reported third-quarter earnings of $2.93 a share and $53.6 billion in revenue. Analysts were projecting earnings of $3.29 on $54.5 billion in revenue, according to data aggregator
FactSet.
The stock was rising 1.4% on Friday to $494.74. It’s likely that the market was discounting the earnings miss, given that the company said the earnings per share figure included a one-time charge of 50 cents a share tied to the discontinuation of the company’s charter shipping activities. Adjusted for the one-time charge, Costco’s earnings came in at $3.43 a share, which was better than Wall Street’s forecasts.
Still, the quarter was a relatively weak one for Costco. Same-store sales rose just 0.3% in the quarter, worse than expectations for a 2.8% increase. E-commerce same-store sales fell 10%. Much of the decline in e-commerce was driven by weaker demand for big-ticket discretionary items, such as electronics, jewelry, and home furnishings, management said in a call with investors on Thursday.
This is the third consecutive quarter Costco leaves investors wanting more. The company missed both sales and earnings expectations in the first quarter, while revenue fell short in the second quarter. Shares of Costco are up close to 7% this year, slightly underperforming the S&P 500‘s 8.5% gain.
“Sales were weaker due to [foreign exchange] and gas headwinds and eCommerce weakness continued from April sales (down 10% YoY),” wrote Jefferies analyst Corey Tarlowe. “That said, we still believe COST is well-positioned to gain a share in this current macro environment due to its value offering.”
The slowdown isn’t unique to Costco. Retailers have struggled this quarter as shoppers showed signs of pulling back in response to a slowing macroeconomic environment.
Target
(TGT), for instance, warned of slower sales trends for the current quarter, while
Lowe’s
(LOW) and
Home Depot
(HD) cut their full-year forecast
“Although we delivered positive comparable sales in Pro and online for the first quarter, we are updating our full-year outlook to reflect softer-than-expected consumer demand for discretionary purchases,” said Lowe’s CEO Marvin Ellison earlier this week.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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