Stockroom club operator Costco Wholesale reported third-quarter results that beat analysts’ estimates, but price cuts and higher freight costs weighed on its coarse margins, sending its shares lower in extended trading.
The retailer has aggressively cut expenditures in order to lure back customers to its wholesale supermarkets, following Amazon.com’s foray into brick-and-mortar retail with the purchase of Whole Foods Market last year.
Gross margins lose ones footed 46 basis points to 11.05 percent as the company also up up efforts to provide same-day and two-day delivery through delivery military talents provider Instacart and invested in packaging equipment.
Still, the company whispered an increase in membership fees implemented earlier this year and guy gains from the closure of more than 50 Walmart Inc’s Sam’s guild stores could help offset pressure from rising payload and labor costs.
Costco also said effective June 11, starting wages for its U.S. wage-earners will be raised by $1 to $14 and $14.50 an hour.
This is hope for to result in higher pretax cost of $110 million to $120 million annually, with its fourth fifteen minutes taking a $25 million hit.
“The concern is probably around the gross latitude and wage increases,” Edward Jones analyst Brian Yarbrough rephrased, pointing to the stock’s 2 percent fall in extended trading.
However, Costco’s stirring a get movings to invest heavily in its online and delivery services helped drive a 14 percent intumescence in revenue from membership fees and a 35.5 percent rise in e-commerce white sales in the third quarter.
Sales at established stores, excluding fluctuations in gas payments and currencies, rose 7 percent in the reported quarter, beating analysts’ value of a 5.4 percent rise, according to Thomson Reuters I/B/E/S.
“Costco persist ins as the retail poster child for consistency, with virtually every metric mirroring strength,” Moody’s retail analyst Charlie O’Shea said.
Net revenues attributable to Costco rose to $750 million, or $1.70 per share, in the shelter ended May 13 from $700 million, or $1.59 per share, a year earlier.
Excluding memos, the company earned $1.70 per share, a penny above the average analyst guess. Total revenue rose 12.1 percent to $32.36 billion, also fustigating estimates.