Costco Wholesale Corp Reports Flat Growth in Fiscal Third Quarter due to Sluggish Sales

On Wednesday, Costco Wholesale Corp reported its fiscal third-quarter financial report which showed no growth in the quarters comparable sales at its U.S. stores. This happened for the very first time in about six years and was a result of weak April sales.

Sales at established stores in the U.S remained flat which did not meet the expectation of the analysts who predicted 1.9 percent growth.  Last time comparable sales had dropped in its U.S stores in 2009.

According to the analysts less spending by high-income consumers that make the main customer base for Costco might be responsible for the lower comparable sales last month. Other issues like unseasonal cold weather last month and the company's transition issues from American Express Co to Visa Inc for its co-branded credit cards might also have weighed on the U.S store comparable sales in the quarter ending May 8.

Other retailers such as Macy's Inc and Target Corp also reported quarterly sales that were weaker than expected due to the unexpected weather and less demand for apparel and electronics. However, Wal-Mart Stores Inc which has its core customer base from the lower-income group reported better-than-expected sales. It was also assisted by higher demand for apparel and augmented prices of drug.

It clearly suggests that while the lower-income customers have sped up their spending, the middle and higher income customers have saddled on what they spend.

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