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Costco Shares Have Been Poorly Received By Investors

Costco (COST) reported 4th quarter results that showed a surprising beat on the bottom line.

Initially, the stock reacted with a nearly 5% surge in the share price before cutting those gains in half. For the quarter, earnings came in at $1.77 a share, up 2% or $0.04 over last year’s fourth quarter earnings of $1.73 a share. Lower gasoline and grocery prices continued to weigh on the retailer’s results, but even so, the retailer outperformed during the quarter.

Sales for the fourth quarter were $35.7 billion. Total reported sales were up 2% for the period on a YOY basis. Fourth quarter 16-week reported comparable sales figures were flat year-over-year. Comparable sales were negatively impacted by gas price deflation. That was a little over 200 basis points of impact to the company and by weaker foreign currencies relative to the U.S. dollar, the latter about 1 percentage point of impact to sales. Excluding deflation, the flat U.S. comp sales figure for the fourth quarter would have been plus 2%. The reported Canadian comp figure of plus 2% would have been plus 5% ex-gas and FX and the reported minus 2% other international comp figure, ex these two factors, would have been plus 1%. Total comps were reported as zero for the quarter and again, excluding gas and FX, would have been plus 3%. Tobacco was the big negative, as that was down 21% year-over-year and as Costco continues to see lower sales in that category. If I look at the food and sundries category, that again on a comp basis was slightly negative year-over-year for the quarter. Ex the tobacco department, it was plus 3. And you can see – continue to see tobacco impacting us...


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