By Dhirendra Tripathi
Investing.com – Costco (NASDAQ:COST) stock fell 2% in premarket Friday as traders focused on the slowdown in February sales, ignoring its second quarter performance that beat estimates.
Costco also continues to warn of container delays, higher labor and freight costs, and chip shortages, all of which are hampering deliveries.
Same-store sales growth in the four weeks ended February 27 slowed to 10.6% on an adjusted basis from 10.8% in the four weeks ended January 30. Those numbers were surprising as they accompanied the quarterly disclosures that revealed an over 11% growth in comparable sales in the 12 weeks ended February 13, reflecting that higher prices of food and groceries are beginning to bite.
Costco relies on consumers looking for bargains while they do bulk shopping, a habit that got further boost in the pandemic. It was expected to weaken with the reopening of offices, but trends at retailers like Kroger (NYSE:KR) indicate people are still stocking up more than usual, preferring to eat home-made food.
While the elevated level of shopping undergoes adjustments in the post-pandemic world, record-high inflation is finally hurting pockets even as supply chain issues linger.
“Despite all the supply chain issues, we're staying in stock and continue to work to mitigate cost and price increases as best we can," Reuters quoted Chief Financial Officer Richard Galanti as saying.
Second quarter adjusted earnings per share were $2.92 cents on net sales of $51 billion, up 16%. Both earnings and sales beat estimates.