Price cuts and freight costs pressure Costco’s margins, sending its shares lower


Costco also said effective June 11, starting wages for its U.S. employees will be raised by $1 to $14 and $14.50 an hour.

This is expected to result in higher pretax cost of $110 million to $120 million annually, with its fourth quarter taking a $25 million hit.

“The concern is probably around the gross margin and wage increases,” Edward Jones analyst Brian Yarbrough said, pointing to the stock’s 2 percent fall in extended trading.

However, Costco’s moves to invest heavily in its online and delivery services helped drive a 14 percent growth in revenue from membership fees and a 35.5 percent rise in e-commerce sales in the third quarter.

Sales at established stores, excluding fluctuations in gas prices and currencies, rose 7 percent in the reported quarter, beating analysts’ estimate of a 5.4 percent rise, according to Thomson Reuters I/B/E/S.

“Costco continues as the retail poster child for consistency, with virtually every metric reflecting strength,” Moody’s retail analyst Charlie O’Shea said.

Net income attributable to Costco rose to $750 million, or $1.70 per share, in the quarter ended May 13 from $700 million, or $1.59 per share, a year earlier.

Excluding items, the company earned $1.70 per share, a penny above the average analyst estimate. Total revenue rose 12.1 percent to $32.36 billion, also beating estimates.

Source link

Products You May Like

Articles You May Like

Canada approves recreational use of marijuana
Start paying off your student loans as soon as possible, even before graduation
House passes farm bill 213-211 that could cut food stamps for millions
Why this US city is the worst place for you to retire
Stocks are in ‘reset,’ but these two groups could deliver solid gains

Leave a Reply

Your email address will not be published. Required fields are marked *