By Juveria Tabassum
(Reuters) -Costco Wholesale missed market expectations for fourth-quarter revenue on Thursday hurt by cautious consumer spending on pricier items at its membership-only stores and lower gasoline prices.
While ultra-low prices are driving demand for groceries and kitchen staples, consumer spending on furniture, home and sporting goods has been choppy, hurting sales at Costco (NASDAQ:)’s warehouses.
“There’s definitely some signs that the consumer is being very choiceful in how they’re spending their dollars,” Chief Financial Officer Gary Millerchip said on a post-earnings call.
Customers were looking for more deals, and appliances and electronics categories became more promotional over time, Millerchip added.
Online shopping is also driving sales for retailers as consumers look for the convenience of choice and delivery.
“Shoppers have not run out of steam but are redistributing their spend between various physical and online retailers,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
While Costco has worked on drawing more sales through its website and mobile app, its ecommerce sales growth slowed to 18.9% from 20.7% in the previous quarter.
The membership warehouse retailer’s same-store sales also took a hit from lower gasoline prices. They grew 5.4% in the reported period ended Sept. 1, compared with a 6.6% rise in the third quarter.
Costco’s fourth-quarter revenue rose nearly 1% to $79.70 billion, falling short of analysts’ average estimate of $79.97 billion, as per LSEG data.
However, net income of $5.29 per share beat estimates of $5.08 apiece, as gross margins grew by 40 basis points.
In July, Costco said it would hike its annual membership fee by $5 to $65 for the “gold star” members, and to $130 from $120 for executive members, effective Sept. 1.
Costco’s shares fell 1% in extended trading and have gained about 37% so far this year.
