Costco Wholesale Corp, the largest warehouse-club chain in the U.S. reported its fiscal first quarter earnings on Wednesday, which missed estimates by analysts even as the chain’s sales increased as it was offering more discounts.
Net income during the quarter that ended November 24 increased to over $425 million, which was equal to 96 cents per share, from the $416 million and 95 cents per share during the same period one year earlier.
Analysts projected the company, based in Issaquah, Washington, to have a profit of more than $447.5 million.
Sales during the first quarter at stores that were opened for over one year were up by 5%, excluding foreign currency rates of exchange and gasoline prices.
Comparable revenue was down by 0.3% at Walmart in the U.S. and up by 0.9% for Target Corp in the most recent financials released by those two companies.
Retailers from Macy’s to Walmart have offered huge discounts during the current holiday season in an attempt to lure in shoppers who continue to be uneasy about the economy’s strength and the security of jobs across the U.S.
Membership fees revenue at Costco was up by 7.4% to end the quarter at $549 million, said Costco officials. That was part of the overall increase in revenue to more than $25 billion. That was in comparison to estimates by analysts of $25.4 billion.
Costco shares on Tuesday dropped to $120.04 or 1.3%. During 2013, the shares have gone up in value by 22% compared to the 26% increase overall by the S&P 500 index.
A number of people in the U.S. continue to have problems with joblessness along with higher payroll taxes that limit their expenses, putting a further drag on a retail environment that has barely grown this year.
While these clubs have been a bright area for retail, with shoppers looking to save by purchasing in bulk quantities, sales growth at Costco has slowed recently.
