Costco Logs Disappointing Sales

By Lisa Beilfuss 

Sales at Costco Wholesale Corp. grew a disappointing 2% in the latest quarter, as the warehouse club becomes the latest retailer to report lackluster results.

Shares in the company declined 2.2% to $158.50 in premarket trading.

Sales for the fourth-quarter ended Aug. 28 rose to $35.7 billion from $35.0 billion a year earlier, the company said, but fell short of the $37.2 billion analysts had anticipated.

Costco joins a chorus of retailers reporting softer sales as foot traffic falls and online retailers like Amazon.com grab business. Department store giant Macy's Inc. last month said it would shrink its store base by about 15%; Target Corp. reported its first same-store sales decline in more than two years; and many companies reliant on mall traffic -- such as eatery Ruby Tuesday and cosmetics company Estée Lauder -- are feeling the pinch.

For Costco, the price of gasoline has been an added pressure. The company is one of the biggest gasoline sellers in the country, and it benefited from the oil market's collapse and its ripple across commodity markets as the retailer captured falling wholesale prices at a faster rate than smaller gas stations. But energy prices have stabilized in recent months, with the price of gasoline rising 16% during the month of August and roughly flat from a year ago.

The company said sales at existing stores were flat in August and for the quarter. Excluding gas sales and backing out adverse currency fluctuations, sales on that basis rose 2% in August and 3% for the quarter. Canada was a bright spot, logging 5% same-store sales growth for the quarter and outpacing 2% domestic growth.

Analysts, according to Thomson Reuters, were expecting Costco to report same-store sales growth of 1.3% in August and 3.4% excluding gas.

Costco will report full fourth-quarter results on Sept. 29.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

September 01, 2016 09:00 ET (13:00 GMT)

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