Costco's fiscal Q1 earnings of US$425M fall short of analysts' projection of US$447.5M, despite increase in total sales

Cindy Allen

December 11, 2013 (Bloomberg LP) – Costco Wholesale Corp., the largest U.S. warehouse-club chain, reported fiscal first-quarter profit that trailed analysts’ estimates even as sales climbed as it offered greater discounts.

Net income in the quarter ended Nov. 24 rose to $425 million, or 96 cents a share, from $416 million, or 95 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Analysts projected profit of $447.5 million, according to data compiled by Bloomberg.

Costco has worked to lower its already discounted prices in the past year to attract more shoppers to its annual memberships. First-quarter sales at stores open more than a year increased 5 percent, excluding changes in gasoline prices and foreign-currency exchange rates.

Comparable revenue fell 0.3 percent at Wal-Mart Stores Inc. in the U.S. and rose 0.9 percent at Target Corp. in their most recent quarters. Retailers from Wal-Mart to Macy’s Inc. have been offering deep discounts for the holiday season to lure shoppers who are uneasy about the strength of the economy and the security of their jobs.

Revenue from membership fees advanced 7.4 percent to $549 million, Costco said. That was part of a 5.5 percent increase in total revenue to $25 billion, the company said. That compared with the average analyst estimate of $25.4 billion.

Costco fell 1.3 percent to $120.04 yesterday at the close in New York. The shares have risen 22 percent this year, compared with a gain of 26 percent for the Standard & Poor’s 500 Index.

--Editors: Robert Valpuesta, David Risser

To contact the reporter on this story: Renee Dudley in New York at rdudley6@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.