Stock Market Today: Why Family Dollar and Costco are on the Move

Stocks appear headed for a tumble today. The Dow Jones Industrial Average has lost 166 points in pre-market trading, suggesting a sharply lower start to the stock market. Wall Street seems to be following Europe's lead: The Stoxx index plummeted overnight on new sovereign debt worries, and was down nearly 2% as of 8:30 a.m. EDT. 

Meanwhile, in company news, both Family Dollar and Costco stocks are on the move after the retailers posted financial results this morning.

Family Dollar today posted mixed results for its fiscal third quarter. The discount retailer's comparable-store sales fell by 1.8% on lower customer traffic. However, a rising store count and more growth in its consumables business helped lift overall year-over-year sales higher by 3% to $2.66 billion, just above Wall Street's estimate of $2.61 billion. Still, profit was surprisingly low, falling 19% to $0.85 a share as Family Dollar cut prices in a bid to protect market share. CEO Howard Levine said in a press release that those price investments were already "resonating with customers" and that management is "encouraged by the improving trends." The company reaffirmed its outlook for fiscal fourth-quarter earnings of roughly $0.80 a share on flat sales growth. The stock was down 2.4% in pre-market trading.

Costco announced this morning that year-over-year revenue in June rose 10% to reach $11 billion. Stripping out its growing store base, sales at existing warehouses climbed an impressive 6%, or well above the numbers other retailers are posting these days. June's results also keep Costco right on track to match last quarter's 6% overall comp gain when the company delivers its fiscal fourth-quarter results in early October. Wall Street analysts expect Costco to post quarterly earnings of $1.51 per share on $35 billion in sales, or 8% growth over the prior-year period for both figures. With results like that, it's no wonder the warehouse retailer commands a big valuation premium over slower-growing companies such as Wal-Mart and Target. Costco's shares were down 0.2% in pre-market trading in what looks set to be a rough day for stocks overall.

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Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool recommends Costco Wholesale. The Motley Fool 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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