Costco Wholesale Corp (Nasdaq: COST) reported lower-than-anticipated fiscal 2023 first-quarter earnings and revenues. However, the first quarter earnings were higher compared with a similar quarter last year. The share price of Costco closed at $483.02, almost flat from its prior close.
The Issaquah, Washington-based company reported first-quarter revenues of $54.44 billion, an increase of 8.10% from $50.30 in the comparable period last year.
The company’s merchandise costs grew roughly 9% y-o-y to $47.77 billion as it battled with higher labor and transportation costs.
For the first quarter, which ended November 20, 2022, Costco posted earnings of $1.36 billion, or $3.07 per share, compared with $1.32 billion, or $2.98 per share, in the quarter that ended November 21, 2021.
This year’s results included a charge of $93 million pre-tax, or $0.15 per diluted share, primarily related to downsizing our charter shipping activities, and a tax benefit of $53 million, $0.12 per diluted 1 share, related to stock-based compensation.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of $3.11 per share on revenues of $54.64 billion.
Segment wise:
- Net sales were $53.44 billion, an increase of 8.10% from $49.42 billion.
- Membership fees, which vary between $60 and $120 per year, rose to $1 billion from $946 million last year.
Excluding the impacts from changes in gasoline prices and foreign exchange, US comp sales (adjusted) grew by 6.50% on a y-o-y basis, but missed forecasts of a 6.58% rise. Likewise, Canada’s comp sales (adjusted) rose by 8.30%. Other international comp sales (adjusted) jumped 9.10% in 1Q 2023, compared with last year. Overall, the adjusted comp sales of the company increased by 7.10% and surpassed the Street forecasts by 230 bps.
Furthermore, adjusted E-commerce sales fell by 2% y-o-y in the first quarter. Operating margin fell to 3.20% in 1Q 2023, from 3.40% in 1Q 2022.
Costco operates 847 warehouses across the world (US, Canada, Japan, the UK, Korea, Australia, China, France, New Zealand, Sweden, etc.). The company also runs e-commerce platforms in several countries, including the US, Japan, Canada, and the United Kingdom.
The weak quarterly result is expected to keep the stock price of Costco range-bound with a slight bearish bias in the short term.
Technically, the share price of Costco is declining after failing to break the resistance level of 550. The next support is anticipated only near 440. Additionally, the stock is trading below its 50-day moving average while the ultimate oscillator is descending. Therefore, we anticipate the share price of Costco to remain in a downtrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
