Costco Wholesale Corp missed estimates for quarterly earnings as shoppers pulled back on non-essential spending due to stubborn inflation and economic uncertainties.
With consumers prioritising their spend on essential items, including packaged food and groceries, one-stop retailers such as Costco are grappling with a drop in demand for high-margin products such as home furnishings, jewellery, toys and electronics.
Shaky consumer sentiment has also impacted the results of fellow US retailers such as Target Corp and Home Depot in the latest quarter, prompting them to issue disappointing forecasts.
Costco reported a quarterly profit of $2.93 (€2.73) per share in the third quarter of its financial year, missing analysts' expectations of $3.29 (€3.07), according to Refinitiv data.
The warehouse club operator's total revenue for the third quarter was $53.65 billion (€49.99 billion), compared with the estimates of $54.57 billion (€50.85 billion).
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"Costco's solid value proposition and loyal customer base were not enough to capitalise on economic fears, even with their well-priced mix of name brands and in-house Kirkland labeled products," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Costco's quarterly revenue from memberships - priced between $60 and $120 per year and which account for most of the company's gross margin – however, rose to $1.04 billion (€970 million) from $984 million (€916.8 million) a year ago.
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