Costco Wholesale missed market expectations for fourth-quarter revenue on Thursday hurt by cautious consumer spending on pricier items at its membership-only stores and lower fuel prices.
While ultra-low prices are driving demand for groceries and kitchen staples, consumer spending on furniture, home and sporting goods has been choppy.
This has hurt sales at the US wholesaler.
In a post-earnings call, chief financial officer Gary Millerchip said, “There’s definitely some signs that the consumers is being very choiceful in how they’re spending their dollars.”
He added that consumers were looking for more deals, and appliances and electronics categories became more promotional over time.
Redistributing Spend
Online shopping is also driving sales for retailers as consumers look for the convenience of choice and delivery.
The chief investment officer at Running Point Capital Advisors Michael Ashley Schulman said, “Shoppers have not run out of steam but are redistributing their spend between various physical and online retailers.”
While Costco has worked on drawing more sales through its website and mobile app, its e-commerce sales growth slowed to 18.9% from 20.7% in the previous quarter.
The membership warehouse retailer’s same-store sales also took a hit from lower gasoline prices, growing 5.4% in the reported period ending 1 September, compared with a 6.6% rise in the third quarter.
Costco’s fourth-quarter revenue rose early 1% to $79.70 billion, falling short of analysts’ average estimate of $79.97 billion, as per data from the London Stock Exchange Group.
However, net income of $5.29 per share beat estimates of $5.08 each, as gross margins grew by 40 basis points.
In July, Costco said it would hike its annual membership fee by $5 to $65 for its “gold star” members, and to $130 from $120 for executive members, effective from 1 September.
Costco’s shares fell 1% in extended trading and have gained about 37% so far this year.
Read More: Kroger-Albertson’s US Anti-Trust Trial To End But Other Legal Blocks Persist
