Costco's Latest Earnings Results Aren't All That Concerning
There are signs that the economy is slowing down, and even Costco Wholesale (NASDAQ: COST) isn't immune to those effects. As consumers tighten their budgets and cut unnecessary expenses, that leads to less spending across the board. And the company's most recent earnings numbers do suggest some softness right now -- but the results aren't as bad as they appear.
On May 25, Costco reported its fiscal third-quarter earnings numbers for the period ended May 7. Earnings per share of $2.93 for the quarter fell well short of what analysts were expecting at $3.29. The problem with razor-thin margins is there's not much room for error for the company. And selling, general, and administrative costs, one of its key expenses, rose by 8% last quarter while sales only increased by 2%.
A softer economy is making it more challenging for retailers to grow their earnings and even Costco isn't proving to be infallible anymore. But while there has been volatility in its bottom line, Costco's profit margin remains largely intact with its five-year average:
Source Fool.com
