Costco Wholesale misses quarterly revenue estimates on still-muted spending

(Reuters) -Costco Wholesale missed market expectations for fourth-quarter revenue on Thursday on cautious spending by budget-conscious customers at its membership-only stores, as well as an impact from lower gasoline prices.

Shares of the company were down about 1% in extended trading. They have gained about 37% so far this year.

While ultra-low prices on groceries and other kitchen staples is driving demand for essential products, consumer spending on big-ticket categories such as furniture, home and sporting goods has been choppy, hurting sales at Costco’s warehouses.

The company also banks on demand for pricier goods such as patio furniture during the summer as well as back-to-school shopping for items such as tablets and other electronics.

“Costco’s relatively affluent member base will be among the first to return to discretionary spending as inflation cools and interest rates come down,” said Sky Canaves, analyst at eMarketer.

The membership warehouse retailer’s same-store sales are also taking a hit from lower gasoline prices, which squeeze their margins. They grew 5.4% in the reported period ended Sept. 1, compared with a 6.6% rise in the third quarter.

Excluding gasoline, the company’s comparable sales rose 5.4%, below estimates of a 6.4% rise, according to LSEG data.

In July, the company said it would hike its annual membership fee by $5 to $65 for the “gold star” members, and to $130 from $120 for executive members. The hike was effective from Sept. 1.

Costco’s fourth-quarter revenue rose nearly 1% to $79.70 billion, falling short of analysts’ average estimate of $79.97 billion.

The company’s quarterly revenue from memberships was flat at $1.51 billion, compared with a year ago.

Net income attributable to Costco rose to $2.35 billion, or $5.29 per share, from $2.16 billion, or $4.86 per share, a year ago, beating estimates of $5.08 apiece, as per LSEG data.

(Reporting by Juveria Tabassum; Editing by Alan Barona)