Costco Wholesale Corp. posted higher-than-expected earnings, but missed sales expectations – potentially due to intense competition in the grocery space.
For the three months ending on September 1, the hypermarket chain reported adjusted earnings of $2.69 per share, well ahead of the Street consensus estimate of $2.56.
Costco’s total revenues for the quarter increased +7% year-over-year to $47.5 billion, which fell short of analysts' expectation of $47.7 billion.
The company’s comparable sales rose +5.1%, thereby missing the Refinitiv forecast of +5.25%.
However, membership renewal rates in both the U.S. and Canada and in markets around the world continued to hover around record highs.
Costco and other traditional U.S. grocers are cutting prices while upping the ante on their online operations, as Amazon.com and Walmart expand aggressively into the grocery market.
Costco is expanding its international presence. About two months ago, it opened its first warehouse in China, where overcrowding and traffic jams in the neighborhood led to the retailer to limit the number of shoppers in the store. The chain is also planning to open a second outlet in Shanghai, where it has 20,000 registered members. It said that it was working to mitigate the impact of import tariffs from the U.S.-China trade tensions.