By Juvería Tabassum
(Reuters) -Costco Wholesale missed market expectations for fourth-quarter revenue on Thursday, hurt by cautious consumer spending on more expensive items at its members-only stores and lower gasoline prices.
While ultra-low prices are boosting demand for food and kitchen staples, consumer spending on furniture, home goods and sporting goods has been uneven, hurting sales at Costco warehouses.
“There are definitely some signs that the consumer is being very selective in how they spend their money,” Chief Financial Officer Gary Millerchip said in a post-earnings conference call.
Customers were looking for more deals and the appliance and electronics categories became more promotional over time, Millerchip added.
Online shopping is also driving sales for retailers as consumers seek the convenience of pick-up and delivery.
“Shoppers have not run out of steam, but they are reallocating their spending among various physical and online retailers,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
While Costco has worked to generate more sales through its website and mobile app, its e-commerce sales growth slowed to 18.9% from 20.7% in the previous quarter.
The membership warehouse retailer’s same-store sales were also affected by lower gasoline prices. They grew 5.4% in the reporting period ending Sept. 1, compared with a 6.6% increase in the third quarter.
Costco’s fourth-quarter revenue rose nearly 1% to $79.70 billion, missing analysts’ average estimate of $79.97 billion, according to LSEG data.
However, net income of $5.29 per share beat estimates of $5.08 a share as gross margins grew 40 basis points.
In July, Costco said it would increase its annual membership fee from $5 to $65 for “gold star” members, and from $120 to $130 for executive members, effective Sept. 1.
Costco shares fell 1% in extended trading and have gained about 37% so far this year.
(Reporting by Juveria Tabassum; Editing by Alan Barona)