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

on Dec 14, 2019
Updated: Mar 11, 2020
  • 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.

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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).

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

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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.

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.

Noticeable Figures In The Q1 Earnings Report

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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.

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.  

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.

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.


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