Boston, MA, 03/06/2014 – Costco Wholesale Corp (NASDAQ:COST) announced its second quarter profit which missed analysts’ expectations on account of discounts offered to increase sales during holiday season. It reported a decline of 15% in quarterly profit.
The U.S. largest warehouse club chain’s profits failed estimates because of the discounts it offered to shoppers during holiday period. It reported net profit for the 12 week quarter ended Feb 16 to be $463 million which means $1.05 per share. This marks a fall in net profit from last year when the figure was $547 million, or $1.24 per share. The reported profit also missed analysts’ profit expectations.
Costco Wholesale Corp (NASDAQ:COST)’s total sales in the second quarter increased by 5.8% and settled at $26.3 billion. Analysts had forecasted $26.7 billion on average. Revenue from membership charges increased 4.2% to $550 million.
Costco Wholesale Corp (NASDAQ:COST)’s Chief Financial Officer Richard Galanti said in a statement that sales and gross margins were poor in non- food categories. He emphasized week sales of non food merchandise and in its fresh food business in the holiday season which extends to four week.
The Issaquah, Washington based company has further lowered its already discounted prices in the last year in order to bring in more customers to become its annual members. Sales in the reported quarter at stores open for more than one year rose by 5%, which excludes alterations in gasoline rates and foreign currency exchange rates.
Revenue by similar measured declined 0.4% at Wal-Mart Stores Inc (NYSE:WMT) in the U.S. and reported a fall of 2.5% at Target Corp (NYSE:TGT) in their last quarters.
Costco Wholesale Corp (NASDAQ:COST) declined 2.1% and settled at $114 in the early hours of trading in New York after the company announced the results. The shares fell 2.1% in 2014 through yesterday which compares with a 1.4% increase for the standard & Poor’s 500 Index.