Rising Freight And Labor Costs Overshadow Costco’s Earnings Report

Words by Retail Bum

Costco’s Stock Tanks
Costco’s Stock Tanks
Costco saw a decline in its gross margins as freight and labor costs soared across the U.S., resulting in a 2% decline in the company’s stock on Thursday.

The company had previously warned that high inflation would affect its profits as its members were not buying high-margin and non-essential products with the same gusto.

That said, the company still managed to report profit and revenue that topped estimates. Costco’s total revenue increased by 16% to $52.6 billion in the quarter that ended May 8, 2022, higher than analysts’ estimates of $51.71 billion, Reuters reported.

The company reportedly succeeded in beating estimates as it kept its gas prices several cents below the national average, which helped drive membership and overall sales. The fact that the company’s customers, on average, earn more than those shopping at stores such as Walmart and Target also seemed to help the retailer pull ahead of its competitors.

“We’re not seeing trade down really. We’re seeing a little bit of shift in where people are spending their money.. this year, it’s more sales in tickets, restaurants, travel, tires and gas,” said Robert Nelson, senior vice president of finance and investor relations, in a post-earnings call.

Excluding costs, the company earned $3.17 per share, which was higher than analysts’ estimates of $3.03.

MUST READS
No more posts to show, explore other topics: