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Costco Wholesale Corp’s Q2 Revenue Jumps 8.3%, Edge Past Street’s Estimates (COST)

Costco Wholesale Corporation (NASDAQ: COST) reported that fiscal second-quarter earnings climbed 39% year-on-year as customers in the backdrop of macroeconomic uncertainty preferred making bulk purchases from its warehouses.

The Issaquah, Washington-based Company has been consistently posting better-than-expected quarterly results lately thanks to wobbly macroeconomic environment in the U.S. which is prompting customers to buy goods in bulk.

Increase in payroll taxes, higher gas prices and delay in tax refunds along with concerns over possible job cuts due to squeeze in the federal government spending has taken its toll on U.S. consumer spending so far this year. Just last month, world’s largest discount retail chain Wal-Mart Stores Inc. (NYSE: WMT) said that its February sales was off to a worst possible start. In addition, several department chains, clothing chains and eatery chains have provided cautious outlook as they fear dip in consumer discretionary spending due to higher taxes and federal spending cuts.

However, as Costco sells merchandises at much lower prices than other discount retailers, customer traffic at its warehouses has remained high in recent quarters. The only concern for investors will be increasing costs for the company.

For the fiscal second quarter which ended Feb. 17, Costco Wholesale Corp reported a profit of $547 million, or $1.24 a share, compared to a profit of $394 million, or 90 cents a share, in the same quarter of last year.

The bottom line in the recently concluded quarter was also boosted by a onetime gain (tax benefit) of $62 million or 14 cents.

Total revenue during the period soared 8.3% to $24.87 billion. Analysts’ consensus estimate was for earnings of $1.06 a share on revenue of $25.03 billion, according to a data compiled by Thomson Reuters.

Revenue from membership fees increased 15% during the quarter to $528 million.

Operating margin shrank marginally to 97% from 97.1%.

Merchandise costs jumped 8.1%, while selling, general and administrative expenses soared 8.4% during the fiscal second quarter.

Same-store-sales, excluding the impact of currency fluctuations and rise in gasoline prices, rose 5% in the recently concluded quarter.


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