© Reuters. FILE PHOTO: People form a long queue as they wait for the Costco wholesalers to open in Manchester, Britain March 15, 2020. REUTERS/Phil Noble
By Granth Vanaik
(Reuters) – Costco Wholesale Corp (NASDAQ:) missed estimates for quarterly earnings on Thursday as shoppers pulled back on non-essential spending due to stubborn inflation and economic uncertainties.
With consumers prioritizing their spending on essential items, including packaged food and groceries, one-stop retailers such as Costco are grappling with a drop in demand for high-margin products such as home furnishings, jewelry, toys and electronics.
Shaky consumer sentiment has also impacted the results of Target Corp (NYSE:) and Home Depot Inc (NYSE:) in the latest quarter, prompting them to issue disappointing forecasts.
Costco reported a quarterly profit of $2.93 per share, missing analysts’ expectations of $3.29, according to Refinitiv data.
The warehouse club operator’s total revenue for the third quarter was $53.65 billion, compared with the estimates of $54.57 billion.
“Costco’s solid value proposition and loyal customer base were not enough to capitalize on economic fears, even with their well-priced mix of name brands and in-house Kirkland labeled products,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Costco’s quarterly revenue from memberships – priced between $60 and $120 per year and which account for most of Costco’s gross margin – however, rose to $1.04 billion from $984 million, a year ago.
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