Costco’s earnings hit by extra expenses from wages, cleaning amid coronavirus pandemic

Costco Wholesale Corp. shares fell in the extended session Thursday after the retailer missed Wall Street expectations for its fiscal third quarter, during which it spent nearly $300 million in wages and extra sanitation amid the coronavirus pandemic.

Costco COST, +1.16% said it earned $838 million, or $1.89 a share, in the quarter, compared with $906 million, or $2.05 a share, in the year-ago period.

The quarterly profit was impacted by pretax expenses of $283 million, or 47 cents a share, “from incremental wage and sanitation costs related to COVID-19,” the retailer said.

Sales rose 7% to $36.45 billion, compared with $33.96 billion a year ago. Same-store sales rose 4.8% in the quarter, with online sales jumping 65%.

Analysts polled by FactSet expected the retailer to report GAAP earnings of $1.96 a share on sales of $37 billion.

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Costco earlier this month reported that its April sales fell 1.8% as skyrocketing e-commerce sales didn’t make up for a drop in foot traffic at its stores, which the retailer pinned down on stay-at-home orders, social distancing restrictions and closures, adding that the ongoing coronavirus-related shutdowns also impacted its travel business, food courts and departments such as optical and photo.

April sales fell to $11.4 billion from $11.6 billion in April 2019. E-commerce sales rose nearly 86% in the month, the retailer said. Same-store sales fell 4.7% in April, including a 3.3% drop in U.S. same-store sales.

Costco’s March sales, which partially captured the impact of the first days of shelter-in-place orders across the U.S. to curb the spread of coronavirus, rose 12% and included a 48% jump in online sales.

Source: https://www.marketwatch.com/story/costcos-earnings-hit-by-extra-expenses-from-wages-cleaning-amid-coronavirus-pandemic-2020-05-28?mod=home-page

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