Costco Wholesale reported lower-than-expected quarterly revenue on Thursday, hit by a slowdown in the number of customers shopping on the warehouse club operator’s website.
U.S. grocers have become increasingly dependent on their online businesses to drive sales growth as consumers demand the convenience of shopping at home or at work in a sector saturated with low-price competition.
However, Costco blamed a late Thanksgiving weekend this year for denting sales in the first quarter ended Nov. 24.
The company’s e-commerce comparable sales rose only 5.7% in the first quarter, far short of the 21.9% jump in the previous quarter and a 26.2% gain in the year-ago quarter.
It also faced a website outage during the Thanksgiving period, which happened after the first quarter ended.
People shop for household items at a Costco store in Alhambra, California, on August 19, 2019.
FREDERIC J. BROWN | AFP | Getty Images
“Expectations are high. Some of the times e-commerce sales do not grow 20% and people get disappointed,” Edward Jones analyst Brian Yarbrough said.
“They (Costco) are not pursuing e-commerce as aggressively as other retailers like Target, Walmart or other retailers… they want customers in the clubs as people buy a lot more when they see the deals.”
Shares of the Issaquah, Washington-based company that have risen 45% this year were down about 1% in extended trading.
However, Costco’s comparable sales, excluding the impact of currency and gas price fluctuations, rose 5%, above the average analysts’ estimate of 4.95%.
Excluding items, Costco earned $1.73 per share, beating Wall Street expectations of $1.72, according to IBES data from Refinitiv.
Total revenue rose 5.6% to $37.04 billion, but fell short of analysts’ projection of $37.25 billion.
Net income attributable to the company rose 10% to $844 million, or $1.90 per share, from a year-ago.
Excluding items, Costco earned $1.73 per share, beating Wall Street expectations of $1.72, according to IBES data from Refinitiv.