Shop Talk

Retailers, consumers and prices

Check out line: Not Costco, too?

July 23, 2008

costco1.jpgCheck out the earnings warning from Costco.
Warehouse clubs were supposed to be benefiting from the weak economy and soaring gas prices as consumers, hit by rising food costs and gasoline prices, looked to save money.
But it turns out that benefit might only be on the sales side, not the bottom line.
Costco said Wednesday that quarterly profit would be well below analysts’ estimates.
“Factors negatively affecting our fourth-quarter earnings outlook arise largely from inflation, particularly as to energy costs,” Chief Financial Officer Richard Galanti said in a statement.
The company is making less money on its gasoline operations and margins on its merchandise were also down as it tried to maintain prices that would attract customers, Costco said.
Warehouse clubs and discounters had been some of the better retail sales performers in recent months.

So is Costco’s warning specific to the company, or is the lower-priced part of the retail spectrum taking a hit now, too?
Also in the basket:
Philip Morris International beats Wall Street view
Hershey profit down excluding charges
A lean holiday season: stores cut inventories, but hope glitz is gold (WWD)

(Photo: Reuters)

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