Costco Wholesale’s profits beat Wall Street estimates amid a big bump in existing store traffic, but the warehouse club posted lower than expected revenues amid a strengthening dollar and low prices for gas.
Quarterly earnings of $516 million, or $1.17 per share, rose nearly 10 percent from last year. Analysts expected earnings of $1.16 per share.
Costco posted revenues of $26.1 billion, up 1 percent from last year, but short of analyst predictions of $26.7 billion.
So-called comparable sales, which measure the performance of stores that were open last year, fell 1 percent during the quarter ended May 10, due to a steep 6 percent drop in the company’s international segment and weak U.S. growth.
But when gasoline sales (which fall when gas prices are low, as they are now) and foreign-currency effects are factored out, international sales rose 7 percent and U.S. sales rose 5 percent for a total increase of 6 percent over the quarter, a strong performance.
The results underscore how the Issaquah company’s growth machine is humming even as rivals like Wal-Mart struggle with bringing more people to their cavernous warehouses.
But the numbers also highlight how volatile prices for gasoline, which accounts for about a tenth of Costco’s sales, can muddle the tea leaves for analysts. The same goes for the unexpected gyrations of the dollar versus other international currencies, which hinge on macroeconomic developments that are out of Costco’s control – yet are increasingly important to its top-line results as the company opens more stores overseas.
Costco shares rose 1.5 percent, closing at $145.42 on Wednesday, before the earnings were announced.
The company will hold a conference call to discuss the earnings report on Thursday at 8 a.m. Pacific Time.
