Costco Wholesale Corp (Nasdaq: COST) reported mixed results for fiscal 2021 second-quarter. While earnings missed estimates, revenue surpassed Wall Street expectations.
The company’s bottom line was mainly affected by the decision to increase employees who worked during the COVID-19 pandemic. Following the mixed quarterly results report, the stock lost $1.72 or 0.54% to close at $317.32.
Issaquah, a Washington-based company, reported second-quarter 2021 revenues of $44.769 billion, compared with $39.072 billion in a similar quarter last year.
For the quarter ended February 14, 2021, net income increased to $951 million, or $2.14 per share, from $931 million, or $2.10 a share, in the quarter ended February 16, 2020.
Thomson Reuters polled. Analysts anticipated the company to post earnings of $2.45 per share on revenues of $43.80 billion.
The membership-only big-box retail stores clarified that the latest quarterly earnings include $246 million pretax, or $0.41 per diluted share, incurred as costs related to COVID-19 premium wages and sanitization of its stores.
To reward workers who toiled during the pandemic, last week, the company increased its starting minimum wage to $16 an hour, from $15 per hour. The wage per hour is a dollar more than what Amazon and Target pay per hour.
Segment-wise,
- Net sales increased 14.7% y-o-y to $43.89 billion.
- Membership fees increased marginally to $881 million in 2Q 2021, from $816 million in 2Q 2020.
Costco, which currently operates 804 warehouses, has been concentrating on improving its online business last year. The quarterly results indicate a 75.8% y-o-y increase in online sales in 2Q 2021.
Costco offers the most competitive pricing in the industry, making it very attractive for members. Additionally, the takeover of logistics firm Innovel Solutions is also expected to help Costco boost its big-ticket goods’ sales in the forthcoming years.
Comparable store sales for the second quarter of 2021 were 13%. Excluding the impact of gasoline prices and currency conversion rate, same-store sales (adjusted) for Q2 2021 was 12.9%.
While the US comp sales were 11.4%, Canada and other international sales were 13.4% and 21.5%, respectively. Adjusted comp sales for the US were 12.6%. Likewise, adjusted comp sales for Canada and other international was 10.6% and 17.7%, respectively.
Provision for income taxes increased to $348 million in Q2 2021, from $330 million in Q1 2020. The company ended the second quarter with cash and cash equivalents of $8.637 billion.
Furthermore, gross margin increased by roughly 0.5%, led by the tailwinds of greater labor productivity and a drop in wastage of fresh foods.
The mixed Q2 2021 results are expected to keep the stock range-bound with a slight bearish bias.
The price chart indicates that the stock has started declining after failing to stay above 360. Furthermore, the stock has closed below its 50-day moving average. Also, the MACD indicator is in the negative zone. Therefore, we are anticipating the stock to remain in a downtrend in the short-term.
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