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Retail

Costco Had No Comparable Store Sales Growth for the First Time in 6 Years

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May 26, 2016, 4:13 AM ET
Photograph by Saul Loeb AFP/Getty Images
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Warehouse club retailer Costco Wholesale on Wednesday reported no growth in quarterly comparable sales at U.S. stores for the first time in more than six years, hurt by weak sales in April.

Sales at stores in the United States open more than a year were flat, falling short of the 1.9% growth expected by analysts polled by research firm Consensus Metrix. Comparable sales at U.S stores had last fallen in 2009.

Analysts earlier this month said a pullback in spending by high-income consumers, who make up Costco’s (COST) core customer base, contributed to lower comparable sales in April, when the company posted flat growth.

Unseasonably cold weather in April, transition issues arising from the company switching to Visa (V) for its co-branded credit cards from American Express (AXP) may have also weighed on comparable sales during the third quarter ended May 8.

 

While retailers such as Macy’s (M) and Target (TGT) reported weak quarterly sales, citing unseasonable weather and lower demand for apparel and electronics, Wal-Mart Stores (WMT), which largely caters to lower-income customers, reported better-than-expected sales, helped by demand for basic apparel and higher drug prices.

The quarterly results from retailers suggest that lower-income customers are spending while middle and higher-income customers are holding back.

Comparable store sales were flat in the third quarter, lower than the 1% rise analysts were expecting.

Excluding the impact of fuel and currency fluctuations, sales at comparable stores rose 3 percent, below the average analyst estimate of 4.6% growth.

Net income attributable to Costco rose to $545 million, or $1.24 per share, in the third quarter ended May 8 from $516 million, or $1.17 per share, a year earlier.

Revenue rose 2.6% to $26.77 billion from $26.10 billion a year earlier.

Analysts on an average had expected earnings of $1.22 per share on revenue of $27.07 billion, according to Thomson Reuters I/B/E/S.

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