Costco Shares Dip, Hurt By Slowdown in E-Commerce Sales

(Bloomberg) -- Costco Wholesale Corp. fell slightly in late trading after the warehouse retailer suffered a slowdown in online growth.

  • E-commerce sales rose just 5.5% in the quarter, hurt by Thanksgiving falling after the end of the period, which negatively impacted the result by 12 percentage points. Online growth was still slower than previous quarters, though, even when allowing for the impact of the calendar shift. Total revenue for the period ended Nov. 24 was just shy of analysts’ estimates.

Key Insights

  • Costco already reported same-store sales for the quarter, which had beaten analyst’s estimates. But investors’ expectations are high for the retailer, which suffered website glitches over Thanksgiving that left some holiday shoppers frustrated. Costco has been slower than its big-box retail peers in embracing e-commerce, as it would rather have customers coming into its cavernous warehouses for its treasure-hunt shopping experience.
  • Revenue from the membership fees that generate the bulk of Costco’s profit rose in the quarter, but were slightly below what analysts including Edward Jones & Co.’s Brian Yarbrough had expected.
  • Costco’s two main rivals -- Walmart Inc. Sam’s Club and BJ’s Wholesale Club Holdings Inc. -- have also stumbled of late, with Sam’s posting sluggish sales last quarter and BJ’s lowering its full-year outlook.

Market Reaction

  • Costco shares fell 0.9% in late trading. The stock had advanced 46% so far through Thursday’s close -- nearly double the S&P 500 Index’s performance over the same period.
  • For more on the numbers, click here

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