Costco cites weak e-commerce growth for missing analysts’ estimate for revenue in the first quarter

on Dec 14, 2019
Updated: Mar 11, 2020
Listen
  • Costco announces a sharp decline in e-commerce sales in the first quarter.
  • Costco notes $1.73 of earnings per share against the experts' forecast of $1.72 in Q1.
  • Costco records net income at $844 million in Q1, marking 10% growth year over year.
  • Costco has performed well in the stock market in 2019 so far.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

The
American multinational corporation, Costco Wholesale, announced its quarterly
earnings report on Thursday. Having missed the analysts’ estimate for revenue
due to poor e-commerce growth, the stock was reported trading lower in extended
trading on Thursday. Costco
manages a chain of warehouse clubs
(membership only).

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Costco
Announces A Sharp Decline In E-Commerce Sales In The First Quarter

Copy link to section

Costco
spokesperson cited late Thanksgiving in 2019 to have contributed to hurting the
overall sales in the first quarter. In the previous two quarters, Costco
Wholesale Corporation had noted 26.2% and 21.9% growth in e-commerce sales
respectively. In the first quarter, however, the company printed only a 5.7%
rise in e-commerce sales that came as a huge disappointment for the overall quarterly
performance of Costco.

Sources
also reported that following the end of Q1 on November 24th, Costco’s
website was seen unavailable for a while during Thanksgiving. According to analyst
Brian Yarbrough of Edward Jones, Costco is lagging behind in taking e-commerce
as seriously as the major competitors like Walmart and Target do. He further
added that the expectations regarding e-commerce
sales are higher in the digital era
. When comparable sales fail to grow at
20% or more, investors are likely to be disappointed.

Other
Noticeable Figures In The Q1 Earnings Report

Copy link to section

Excluding
the potential effect of fluctuations in gas prices and currency at large,
Costco, however, recorded a 5% growth in comparable sales. In a previous
estimate, analysts had forecast a 4.95% growth in comparable sales for the
company in the first quarter.

Based
on the Refinitiv’s survey, experts were anticipating $1.72 of earnings per
share for Costco in its Q1 earnings report. Noting a slightly higher $1.73 per
share, the company beat the analysts’ estimate for EPS.  

Total
quarterly revenue also grew by 5.6% as compared to the same quarter last year.
At $37.04 billion, however, it was reported shy of the analysts’ estimate of
$37.25 billion in the first quarter. The year over year growth in net income
was highlighted at 10% ($844 million) in the Q1 earnings report.

The
overall performance for Costco in the stock market has remained largely upbeat
in 2019 so far. Share prices were reported at around $205 at the start of the
year. The stock printed a year-to-date high of $305 in November. Sustaining
much of the gains, it is currently settling around $290, after falling from $297
on Thursday, following the performance results. The stock has traded above the
opening level in 2019. Costco currently has a market cap of $128.94 billion and
price to earnings ratio of 34.61.

Ad

Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
Stock Market