Costco Drops the Bag, Reports a Steep Decline in Quarterly Profit
Costco reported second-quarter earnings before the market opened today that missed analysts' estimates. For the quarter ended Feb. 16, Costco posted a profit of $463 million, or $1.05 per diluted share. That marked a 15% decline in profit from the same period a year ago, in which Costco earned $547 million, or $1.24 per diluted share. Wall Street was looking for earnings per share of $1.17 in the period.
Costco said revenue increased 6% in its second quarter to $25.76 billion, up from $24.34 billion last year. Analysts were looking for revenue of $26.65 billion in the quarter. The warehouse club blamed lower international profits and weak sales during the all-important holiday shopping season for its shortcomings in the period.
However, one bright spot from the quarter included a 4% rise in revenue from membership fees to $550 million, up from $528 million in the year-ago period. Additionally, sales at stores open more than 12 months increased 5% in the quarter, excluding negative impacts from gas prices and foreign exchange rates. Costco's chief executive, Richard Galanti, said in the company's press release that "the first four-week period of the quarter represented the majority of earnings underperformance in the quarter."
Looking ahead, Costco plans to open as many as 14 new warehouse stores in fiscal 2014. The company currently operates 649 retail outlets, with the bulk of those located in the United States. Shares of Costco were down more than 3% in early trading on Thursday.
The article Costco Drops the Bag, Reports a Steep Decline in Quarterly Profit originally appeared on Fool.com.Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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