Equities
Costco's earnings exceed expectations at $3.92 per share, but $58.4 billion sales fall short, shares drop over 4%.
By Barry Stearns
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Costco Wholesale Corp. experienced a decline of more than 4% in its shares during after-hours trading following a mixed quarter report. The company reported earnings of $1.74 billion, or $3.92 per share, for the fiscal second quarter, showing an increase from $1.47 billion, or $3.30 per share, in the same period last year. Total sales saw a 5% rise to $58.4 billion, up from $55.3 billion a year ago. Same-store sales also increased by 5.6%, surpassing the expected 5% growth, while e-commerce sales grew by over 18%.
Costco's earnings report comes amidst a challenging period for retailers, with rising costs impacting consumer spending. Other retailers like Target Corp. and Ross Stores Inc. have also highlighted the financial strain on customers due to increased expenses for gas, housing, and food. Target Corp. mentioned that its shoppers still "feel stretched," indicating ongoing financial pressures on consumers.
Analysts anticipated Costco to report GAAP earnings of $3.61 per share on sales of $59.1 billion. However, the company's actual earnings slightly exceeded expectations at $3.92 per share, while sales fell short at $58.4 billion. Despite the mixed results, Costco's same-store sales growth outperformed projections, showcasing resilience in its core operations.
Costco's shares have demonstrated strong performance over the past year, rallying nearly 62%, outpacing the S&P 500 index's gains of about 30%. The market response to Costco's latest earnings report reflects investor sentiment towards the company's ability to navigate challenges in the retail sector and sustain growth.
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