Costco Wholesale (COST) – Get Free Report posted weaker-than-expected first quarter earnings Thursday as membership revenues missed Street forecasts amid a pullback in sales over the final weeks of autumn.
Costco said diluted earnings for the three months ended Nov. 20, the company’s fiscal first quarter, came in a $3.09 per share, up 3% from the same period last year but 2 cents shy of the Street consensus forecast.
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Group revenues, Costco said, rose 8.1% to $54.437 billion, just shy of analysts’ forecasts of a $54.64 billion tally. Membership revenues rose 5.7% to $1 billion.
Adjusted same-store sales were up 7.1% from last year, Costco said, around 230 basis points ahead of the Street forecast, while e-commerce sales were down 3.7%.
Costco shares, which slipped 0.11% during the Thursday session, were marked 1.1% lower in after-hours trading following the earnings release to indicate a Friday opening bell price of $476.01 each.
Last week, Costco published a weaker-than-expected November sales tally of $19.17, a 5.7% increase from last year that was notably lower than the 7.7% pace recorded over the month of October and the 10.1% advance the group booked in September.
The late autumn slowing echoes comments Brian Cornell, CEO of big box rival Target (TGT) – Get Free Report, who told investors on November 16 that the group saw a “change in shopping behavior in the back half of October leading into November”.
Cornell said consumers were “working with their budget, shopping very carefully, looking for value, and recognizing they’ve got to start with core staples before they spend dollars in discretionary categories.”
Costco may have also suffered from the overall decline in U.S. gas prices, which have fallen more than 30% since hitting an all-time high of $5.10 per gallon earlier this summer.
The gas price surge, in part, helped U.S. same-store sales rise 15.8% over the three months ending in August, Costco reported, a move many analysts put down to its offering of cheaper gas to club members.