Costco Wholesale Corp topped Wall Street estimates for quarterly results on Thursday, helped by strong demand for its fresh food, candies and fuel offerings despite rising inflation.
A Costco truck makes a delivery to a Costco store in Carlsbad, California, U.S., May 8, 2017. REUTERS/Mike Blake/File Phototopped Wall Street estimates for quarterly results on Thursday, helped by strong demand for its fresh food, candies and fuel offerings despite rising inflation.
However, the company's gross margins for the reported quarter were squeezed as it battles higher freight and labor costs due to rising inflation and global supply chain snags, sending its shares down about 3% in extended trading. Costco benefits from strong spending by well-to-do Americans with club memberships even as lower-income consumers spend lesser, hit by rising prices of everything from edible oils to gas due to the Ukraine war and supply chain disruptions.The membership-only retail chain's strong quarterly results comes at a time when Target Corp reported a fall in quarterly profit as consumers squeezed by higher prices curtailed spending on non-essential items.
Still, Costco's total inventory at the end of the fourth quarter was up 26% year-over-year with the company turning promotional like major U.S. retailers Walmart Inc"Initial seasonal sales seem to be going well... would expect the 26% y-o-y increase to start to head down as it has in just the past few weeks a little bit," Chief Finance Officer Richard Galanti said in an earnings call.
The big-box retailer's total revenue rose 15% to $72.10 billion in the fourth quarter, beating estimates of $72.04 billion, according to IBES data from Refinitiv.The company's gross margin on a reported basis came in at 10.18%, compared to 10.92%, a year earlier.Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shailesh Kuber
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