CPG - Costco Stock Went Down After the Company Reported Earnings. The Pace of Inflation Is Picking Up
Costco Wholesale ( NASDAQ:COST ) had a slow beginning to its new fiscal year, missing forecasts for earnings and revenue, resulting in a decline in Costco stock price.
Investors were on edge leading up to the release of Costco’s ( NASDAQ:COST ) first-quarter earnings report after the retailer stunned them with a November sales report that was less than they had anticipated the previous week. The findings that were made public on Thursday increased those fears.
Earnings per share came in at $3.07, and the company reported revenue of $53.44 billion. The consensus estimate for earnings per share was $3.11, while the expectation for revenue was $58.36 billion.
The decline in revenue was one of the factors that led to the company’s second consecutive quarter of margin compression. On Thursday, officials said the company’s gross margin had decreased by 45 basis points, equivalent to 0.45 percentage points.
Costco has turned in a strong performance over the past two years, which has been supported by a jump in demand from Costco’s wealthy customers, which has stayed stable even as some consumers have been forced to cut back on discretionary expenditures as a result of inflation.
Despite this, sales have begun to decline over the past few months as the continued impact of rising costs on household budgets has started to become more noticeable. The increase in same-store sales for the third quarter was 6.6%, higher than the projections of 6.4% growth. However, it was still a slower growth rate than the 13.7% increase seen during the previous quarter. E-commerce revenues decreased by 3.7%.
On a teleconference with investors, the chief financial officer, Richard Galanti, explained that the sharpest slowdown was seen in purchases of high-ticket items and discretionary goods. Galanti reiterated comments made by Walmart chief executive Doug McMillon on Wednesday regarding declining discretionary sales, emphasizing that retailers’ challeng...
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