By Granth Vanaik
(Reuters) – Costco Wholesale Corp missed estimates for quarterly earnings on Thursday as shoppers pulled back on non-essential spending due to stubborn inflation and economic uncertainties.
With consumers prioritizing their spending 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, jewelry, toys and electronics.
Shaky consumer sentiment has also impacted the results of Target Corp and Home Depot Inc in the latest quarter, prompting them to issue disappointing forecasts.
Costco reported a quarterly profit of $2.93 per share, missing analysts’ expectations of $3.29, according to Refinitiv data.
The warehouse club operator’s total revenue for the third quarter was $53.65 billion, compared with the estimates of $54.57 billion.
“Costco’s solid value proposition and loyal customer base were not enough to capitalize 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 Costco’s gross margin – however, rose to $1.04 billion from $984 million, a year ago.
(Reporting by Granth Vanaik in Bengaluru; Editing by Anil D’Silva)