On Thursday, Costco Corp., the Seattle, Washington-based American multinational retailer that operates a chain of membership-only warehouses, had reported a second straight quarter of higher pandemic-related costs, eventually leading to a plunge of its shares’ prices on the day’s extended trading hours despite a better-than-anticipated quarterly earnings’ report.
In point of fact, according to Costco’s quarterly earnings’ report for the three-month period that ended on August 30, a higher demand for fresh products, gardening and sporting goods alongside housing appliances had helped the membership-only retailer boost its revenue by 12.4 per cent to $53.38 billion compared to the same time a year earlier, beating an analysts’ estimate of $52.08 billion, as a pandemic resurgence in the United States had forced a majority of Costco consumers to spend their days at homes, eventually leading to a higher spending in household-related items.
Costco shares plunge despite better-than-expected quarterly earnings
Aside from that, Costco had also added at its quarterly earnings’ report that the Washington-headquartered retailer had spent around $281 million in employee bonuses and sanitization of its warehouses, reflecting an unprecedented rise in pandemic-related expenses among the retailers across the United States, which in effect had jolted the shares’ prices of Nasdaq-listed Costco Wholesale Corp.
by 2.50 per cent to $338.30 per share in post-market trading after wrapping up the day 0.69 per cent higher to $347 a share. More importantly, Costco had forecasted a $100 million in pandemic-related costs, while an additional spending of approximately $281 million due to the pandemic appeared to have spurred up concerns among the market participants.
Besides, the company had also been quoted saying that it had to pay off a hefty sum of $14 million in bonuses every week due to the pandemic-related risks. Nonetheless, unlike many US retailers likes of Amazon.com Inc. and Kroger Co., which had often come under fire for halting hazard pay for their employees, Costco’s additional spending appears to be a major factor in profit gaps between the membership-only warehouse retailer and others.
However, over its fourth fiscal quarter of the year that ended on August 30, Costco’s revenues from the memberships rose by 5.3 per cent to $1.11 billion and its online sales had nearly doubled, while excluding the items, the Seattle-based retailer had earned $3.04 per share, beating an analysts’ estimate of $2.84 per share.