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Costco Gains as Fear of Delta of Fuels Demand Amid Supply Hurdles

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By Dhirendra Tripathi

Investing.com – Costco stock (NASDAQ:COST) traded 0.8% higher in Friday’s premarket as the company overrode cost and supply-side pressures in the fourth quarter to beat all estimates.

Total revenue jumped more than 17% on-year to $62.67 billion as people continued to stock up on essential goods, continuing a pandemic-era spending pattern that was given a new lease of life by the spread of the Delta variant of Covid-19 this summer.

Chief Financial Officer Richard Galanti told analysts Thursday that the company is running out of many of its general items within two weeks and “ordering as much as we can” to replenish the stocks.

The retailer has also placed purchasing limits on selected items, where the fear of Delta has led to a surge in demand. These include toilet paper, paper towels, water and some cleaning items, Galanti told analysts.

Merchandise costs and selling expenses both rose.

Net income rose 20% to $1.67 billion even as the company faced cost pressures due to labor crunch, higher wages, shipping charges and congestion at ports -- problem confronting all manufacturers and retailers as they grapple with high demand on one side and disturbed supplies due to lockdowns on the other.

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