Perhaps you thought Costco (COST) would hold up well, despite the economy, by selling deeply discounted, big-lot items. You’d be wrong. It’s no Wal-Mart (WMT). The company came out with a big warning early this morning:
Actual results for the second quarter will be reported on March 4, 2009. Currently, earnings per share for the second quarter are expected to be substantially below the current First Call consensus earnings per share estimate of $.70. According to Richard Galanti, Chief Financial Officer of Costco: “General economic conditions have negatively affected our sales, primarily in non-foods, and merchandise margins. Our margins have also been impacted by aggressive merchandise pricing in our core merchandise business to drive sales and increase market share, particularly during the first four weeks of the fiscal quarter. To a lesser extent, we are also being adversely affected by lower year-over-year profits associated with our gasoline business; and international profits have been hurt as a result of the strengthening U.S. dollar. Given the uncertainties surrounding the economy, including consumer behaviour, we will not be providing earnings guidance for the remainder of this fiscal year.”
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