Costco Wholesale on Tuesday reported slower-than-expected revenue growth in its August quarter, as sales were hurt by lower fuel prices and the stronger U.S. dollar.
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Earnings, though, rose 10%, better than analysts had estimated.
Overall, the membership warehouse club said comparable sales declined 1% for the 16 weeks ended Aug. 30, the second consecutive quarterly decline in the key metric for retailers. Before the decline in Costco's May quarter, the company--which defines comparable sales as sales at stores and websites in business for at least a year--had reported higher comparable sales in each quarter since 2009.
The second-largest U.S. retailer behind Wal-Mart, and one of the largest fuel retailers in the country, made about 28% of its sales in fiscal 2014 abroad. However, comparable sales fell 10% in Canada and 7% elsewhere overseas in the August quarter, in part because of the stronger dollar.
Excluding the impact of gas prices and currency fluctuations, the company's comparable sales rose 6%, Costco said.
Costco's primary source of profit is membership fees, not sales in stores. Membership revenue evens out fluctuations in sales and allows Costco to offer discounted products from large-screen TVs to organic string cheese, drawing more people to its stores.
In the latest period, membership fees rose 2.2% to $785 million.
Overall, Costco reported a profit of $767 million, or $1.73 a share, up from $697 million, or $1.58 a share, a year earlier. Revenue edged up 0.72% to $35.78 billion.
Analysts surveyed by Thomson Reuters had projected a profit of $1.66 a share on revenue of $36.21 billion.
The company has 686 membership warehouses around the world and boasts a loyal membership with a renewal rate of about 91% in the U.S. and Canada and about 87% world-wide as of 2014, according to a regulatory filing.
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