Costco Slips on Disappointing Earnings, Increased Competition
- By Sydnee Gatewood
Costco Wholesale Corp. (COST) reported disappointing first-quarter 2019 results on Thursday afternoon, sending shares lower on Friday morning.
The Issaquah, Washington-based retailer posted adjusted earnings of $1.61 per share, just shy of Refinitiv's estimates of $1.62. Revenue of $35.1 billion, however, topped expectations of $34.8 billion.
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The intrinsic value of COST
The company noted its net income was boosted by a $59 million tax benefit related to stock-based compensation as well as a $27 million benefit related to the 2017 Tax Cuts and Jobs Act.
Total same-store sales for the quarter grew 8.8% and e-commerce sales increased 32.3%.
The wholesale retailer saw net sales gain 10% to $34.3 billion, while membership sales grew 9.5% to $758 million. During the earnings call, Chief Financial Officer Richard Galanti said Costco also saw an increase in renewal rates despite increased competition from Amazon's (AMZN) Whole Foods and Walmart's (WMT) Sam's Club, which has put pressure on profit margins.
"There's been a little bit more retail competitive pressure out there, not only from supermarkets but Sam's as well," Galanti said. "We've got good fresh sales numbers, but we -- like others -- our competitors are working in a little lower margin."
With a market cap of $92.68 billion, Costco's shares were down 6.63% at $211.50 on Friday morning. GuruFocus estimates the stock has climbed 14% year to date.
Disclosure: No positions.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Sign with COST. Click here to check it out.
The intrinsic value of COST
