Costco Shares Tumble on Disappointing Sales
Warehouse retailer Costco Wholesale reported weaker-than-expected August sales, which were hurt by lower gasoline prices, weaker tobacco demand and a decline in store traffic, and shares fell as much as 6 percent in early trading.
August sales in stores open at least a year rose 2 percent, well below analysts' expectations of 5.6 percent, as compiled by Reuters Estimates.
Costco said traffic was particularly weak in California where it operates more than 100 of its 518 warehouse clubs.
"We do believe that the extreme high temperatures in California impacted our traffic counts negatively in August and hopefully that will bounce back as we move forward," the company said on a recorded call.
Net sales for the four weeks ended Sept. 2 rose 6 percent to $4.84 billion compared with the year-earlier period. Sales for its fiscal fourth-quarter ended Sept. 2 rose 3 percent to $20.06 billion.
Costco customers pay an annual membership fees to shop at the retailer's stores, which sell everything from toilet paper to seafood to diamond rings.
The company said in August, comparable-store sales were strong in televisions, computers, digital cameras, deli, candy and frozen food, but weak in tobacco, toys and seasonal merchandise.
Its gasoline business was also weaker in August, hurt as the average price for a gallon of gas was $2.63 this August compared with $2.83 last year.
"Hopefully moderating temperatures and a stronger showing of seasonal merchandise sales will lead to improving comps in the upcoming months as we go forward," the company said on a recorded call.
Its shares were down $3.27, or 5.3 percent, at $58.34 in early trading.