Costco Wholesale (COST) posted weaker-than-expected third quarter earnings late Thursday as consumer spending on bulk items slowed in the face of elevated inflation and an uncertain job market.
Costco said diluted earnings for the three months ending on May 7, the company's fiscal third quarter, came in a $2.93 per share, down 7.6% from the same period last year and 36 cents shy of the Street consensus forecast.
Group net sales, Costco said, rose 1.9% to $52.6 billion, again shy of analysts' forecasts of a $54.57 billion tally. Membership revenues rose 6.1% to $1.04 billion. Adjusted same-store sales were up 3.5% from last year, Costco said, around 100 basis points ahead of the Street forecast, while e-commerce sales were down 10%.
Average daily transaction were down 3.5% in the U.S., and 4.2% worldwide over the quarter, Costco said, thanks in part to weakness in sales in bigger-ticker, non-discretionary food items.
"This is the second quarter that we've seen that discussion of lower sales of big-ticket discretionary items," CFO Richard Galanti told investors on a conference call late Thursday. "So, all things being equal, we'll be comparing against easier compares six months from now."
Costco shares were marked 0.3% lower in after-hours trading immediately following the earnings release to indicate a Friday opening bell price of $485.00 each.
Earlier this month, Costco updated on April sales earlier this month, noting a gain of 3% from last year to $17.85 billion.
That contrasted with a cautious outlook earlier this year from CFO Richard Galanti, who told investors in February that Costco was seeing "weakness in what I'll call big ticket discretionary items" heading into the start of the spring.
Investors will also look for any update on plans to increase Costco's membership fees, which were last increased in 2017, from the current levels of $60 and $120 per year when the group provides further details to its third quarter earnings on a conference call slated to begin at 5:00 pm eastern time.
