Costco Wholesale (COST) – Get Free Report shares moved lower in early Wednesday trading following the bulk retailer’s stronger-than-expected fourth quarter earnings and solid membership sales.
Costco said diluted earnings for the three months ending on September 3, the company’s fiscal third quarter, came in a $4.86 per share, up 15.7% from the same period last year and 7 cents ahead of the Street consensus forecast.
Group net sales, Costco said, rose 9.5% to $78.94 billion, again topping analysts’ forecasts of a $77.9 billion tally. Membership fees rose 13.7% to $1.509 billion. The group’s overall gross margin was up 0.42% to 10.6%.
Adjusted same-store sales were up 3.8% from last year, Costco said, well ahead of the Street forecast, while e-commerce sales were down 0.6%.
Average daily transaction were down 3.9% in the U.S., and 4.5% worldwide over the quarter, Costco said, thanks in part to “weakness in bigger ticket nonfood discretionary items, as well as the gas price deflation.”
“Costco put up another solid quarter, with the key positive being better than expected gross margins,” said D.A. Davidson analyst Michael Baker, who carries a ‘neutral’ rating with an improved $570 price target on the stock following last night’s results.
“Some were expecting a few increases as it has been more than 6 years since the last … this will come, and we think within the next 6 months, but we think Costco is cognizant of economic headwinds facing the consumer so is taking their time:
Costco shares were marked 1.95% lower in pre-market trading to indicate an opening bell price of $542.20 each.
