NEW YORK, N.Y. – Costco’s stock slipped Thursday, a day after the warehouse club operator said its fiscal second-quarter profit fell nearly 9 per cent as costs rose.
Sales, however, did rise, the company said late Wednesday. Sales at its stores open at least a year, considered an important measure of a retailer’s health, rose 1 per cent. The gain came from its roughly 490 U.S. stores, with sales rising 3 per cent. They fell 7 per cent in Canada and fell 3 per cent at its other international stores.
The Issaquah, Washington, company has nearly 700 total stores around the world.
Rising costs took a bite out of its profit. Merchandise costs rose 2.4 per cent to $24.5 billion and its other costs rose 6 per cent to $2.8 billion.
Costco reported net income of $546 million, or $1.24 per share, in the quarter ended Feb. 14, compared with $598 million, or $1.35 per share, in the same quarter the year before. Analysts expected earnings of $1.28 per share, according to FactSet.
Revenue, which includes sales and membership fees, rose 2.6 per cent to $28.2 billion in the quarter, below the $28.5 billion analysts expected, according to FactSet.
The company said during a conference call Thursday with analysts it will increase pay for its entry-level workers this month, the first increase in nine years. The retailer will pay those workers at least $13 an hour, up from a minimum of $11.50. Costco Chief Financial Officer Richard Galanti said the increase will hurt its earnings for the current quarter by a penny per share, and 2 cents per share each quarter for the following three quarters.
Shares of Costco Wholesale Corp. fell $1.19 to $151.60.