Costco Wholesale Corporation (NASDAQ: COST) on Thursday reported quarterly revenue and earnings that beat analysts’ estimates, but shares still fell as investors worry about the declining gross margin.
The company said four-quarter revenue rose 15. 7 percent to $42.30 billion. Net income was $919 million, or $2.08 per share, up from $779 million, or $1.77 per share, a year earlier. The better-than-expected earnings result was boosted by an increase in membership fee. Fourth-quarter membership fee rose 13.3 percent to $943 million. The company increased the annual membership fee by $5-$60 for Goldstar and business members, according to CNBC.
Analysts polled by Thomson Reuters had estimated earnings of $2.02 per share on revenue of $41.55 billion.
Comp sales for the 17 weeks rose 5.7 percent.
However, Costco shares fell nearly 6 percent to $157.04 per share in the early trading in New York. The company spend more money to keep its members as it faced strong competition from Amazon.com, Inc., which recently bought grocery retailer Whole Foods. The company’s gross margins fell by 15 basis points in the fourth quarter.
"We believe near-term sentiment and fear of the long-term impact of Amazon on Costco's business could continue to create an overhang on COST shares and limit valuation upside," BMO Capital Markets analysts said in a pre-earnings client note.