The speculators are 'tsk-tsking' at the news, but it's still good.
Costco Wholesale Corp. said Wednesday it expects fourth-quarter profit to be below analysts’ estimates, as sales on items like jewelry and furniture slowed and the company struggled with higher gas prices. The warning sent Costco shares down more than 4 percent.
Shares may be down, but profits are still up. So what's the problem?
The yearly numbers look fine.
Earnings for its full fiscal year, which will be 53 weeks, are now expected to range between $2.23 and $2.26 per share, while analysts had been expecting a yearly profit of $2.33 per share.
For the 52 weeks ended Aug. 27, U.S. same-store sales grew 7 percent, international same-store sales were up 11 percent and total same-store sales climbed 8 percent. Net sales for the period rose 11 percent to $57.78 billion from $51.86 billion in the comparable period last year.
But again, the "analysts" seem to be the ones who are setting the tone. Should they be?
The Issaquah-based wholesale club said it expects to earn between 68 cents and 71 cents per share for its quarter ending Sept. 3. The 17-week period will include a one-time tax charge of about 3 cents per share.
Without the charge, Costco said it expects to earn between 71 cents and 74 cents per share. Analysts polled by Thomson Financial had been expecting earnings of 77 cents per share, on average.
So, if we listen to the analysts, we shouldn't be feeling good about Costco's performance. Pity.
Costco had previously said that Wall Street's forecast was at the high end of its expectations, and the company had also warned in that it might be hard to keep profits on gasoline sales up. In a conference call Wednesday with analysts, the company said gas sales were a factor in the reduced forecast but noted that it wasn't the only issue.
It's been an interesting year. Good economic news, low unemployment and inflation, and record high fuel prices.
The company said it "remains positive" in its outlook for its 2007 fiscal year and beyond, and expects to open at least 35 new locations in the coming year.
They must not be listening to the speculators.
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