Categories AlphaGraphs, Earnings, Retail

Costco Q1 profit jumps 20% but misses estimates

Costco Wholesale Corporation (COST) reported a 20% jump in earnings for the first quarter helped by higher sales from stores and online. However, the results missed analysts’ expectations. Following this, the stock inched down over 2% in the after-market session.

Net income climbed 20% to $767 million and earnings jumped 19.3% to $1.73 per share. The results were driven by a tax benefit related to stock-based compensation and to the implementation of the 2017 tax act. Also, the quarter included a charge for an adjustment to its estimate of breakage on rewards earned prior to the fiscal year 2019 for the Citi/Visa co-branded credit card program.

Total revenue increased 10.2% to $35.07 billion helped by an 8.8% rise in comp sales. Sales rose 10.3% to $34.31 billion and membership revenue moved up 9.5% to $758 million. The United States comp sales grew 11% while comp sales for Canada and other international locations rose 2.4% and 4% respectively.

Costco Wholesale Q1 2019 earnings snapshot

Monthly-wise, November comp sales rose 9.2% while it grew 8.6% in October and 8.4% in September. Costco’s comp sales growth was higher than competitors including 3.2% rise at Sam’s Club, 3.4% increase at Walmart (WMT), 5.1% growth at Target (TGT), and 4.3% jump at Best Buy (BBY).

Though e-commerce sales climbed 32.3%, the growth rate fell short of expectations due to the mounting competition from Walmart (WMT) and Amazon (AMZN). Costco risked its name on cheaper prices than rivals Walmart or Target as annual membership revenue are enabling the company to keep the prices down.

Costco Q4 sales beat; stock falls amid warning of ‘weakness’ in financial reporting

The retail markets tend to change the trend according to better employment prospects, rising disposable income, and positive sentiment. The company has been positively benefited by its growth strategies and quality of the merchandise as the primary strength over the years.

At the end of the quarter, the company operated a total of 768 warehouses. This includes 533 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, two in Spain, one in Iceland, and one in France.

Shares of Costco ended Thursday’s regular session down 0.57% at $226.51 on the Nasdaq. The stock has risen over 21% in the year so far while it has fallen over 6% in the past three months.

 

Get access to timely and accurate verbatim transcripts that are published within hours of the event.

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

Leave a Reply

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

Add Comment
Loading...

Cancel
Viewing Highlight
Loading...
Highlight
Close
Top