(Reuters) -Costco Wholesale missed Wall Street expectations for second-quarter profit on Thursday, hurt by rising merchandise costs as the membership-only retail chain resists price hikes on their products. Costco’s earnings results come amid an uncertain retail environment, with retailers including Target and Walmart issuing cautious forecasts bracing for price hikes due to uncertainty on tariffs. […]
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Costco misses quarterly profit estimates on rising merchandise costs
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(Reuters) -Costco Wholesale missed Wall Street expectations for second-quarter profit on Thursday, hurt by rising merchandise costs as the membership-only retail chain resists price hikes on their products.
Costco’s earnings results come amid an uncertain retail environment, with retailers including Target and Walmart issuing cautious forecasts bracing for price hikes due to uncertainty on tariffs.
Costco is vulnerable to trade wars developing from President Donald Trump’s tariffs on imports to the U.S. as well as from retaliatory measures by the affected countries.
“About a third of our sales in the U.S. are imported from other countries and less than half of those are items coming from China,” said CEO Ron Vachris in a post-earnings call.
Soaring egg prices due to rising bird flu cases in the U.S. harmed the company’s margins in the reported quarter, alongside coffee and cocoa price inflation.
Eggs, used in cakes and breads, are raising prices in Costco’s bakery section, overshadowing its lower costs for other ingredients such as sugar, butter and flour, CFO Gary Millerchip said.
The retailer’s merchandise costs rose 9% for the quarter ended February 16, compared with a 5% rise a year earlier.
Costco earned $4.02 per diluted share, missing analysts’ estimate of $4.11 per share, according to data compiled by LSEG.
The company’s quarterly revenue rose 9% to $63.72 billion, compared with analysts’ average expectation of $63.13 billion.
Costco shares fell nearly 1% in extended trading.
In late January, 19 Republican attorneys general demanded Costco to notify the states within 30 days whether it will repeal its diversity, equity and inclusion (DEI) policies or provide an explanation for maintaining them.
The company had faced vehement shareholder opposition on a proposal to curb its DEI initiative, amid U.S. corporations scrapping their respective policies after President Donald Trump’s executive order directing that DEI policies should be dismantled.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Krishna Chandra Eluri)