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ISSAQUAH, Wash. - Soaring temperatures and mortgage rates were the main culprits of membership wholesale club Costco Wholesale Corp.'s disappointing same-store sales performance of 2 percent for August performance, which fell below analysts' expectations and led to its stock seeing its biggest slip in two years, ending the day at $59, 4.2 percent down from Tuesday's closing price.
According to the company, customer visits fell 4.5 percent at stores in California - where Costco operates 28 percent of its stores - due to soaring temperatures. Consumers have also cut back on spending due to slumping home prices and higher mortgage rates.
Still, the retailer saw net sales of $4.84 billion for the four weeks ended September 2, 2007, an increase of 6 percent from last year's $4.56 billion.
For its 16-week fiscal fourth quarter, net sales were $20.06 billion, an increase of 3 percent from $19.50 billion in the 17-week fourth quarter last year.
Net sales for its 52-week fiscal year were $63.06 billion, an increase of 7 percent from $58.96 billion last year, which was 53 weeks.
Costco ended its 52-week fiscal year with 518 warehouses in operation, including 383 in the United States and Puerto Rico, 71 in Canada, 19 in the United Kingdom, five in Korea, four in Taiwan, six in Japan, and 30 in Mexico.
It plans to open an additional 14 to 15 new warehouses, including the relocation of four warehouses to larger and better-located facilities, in the first four months of fiscal 2008, prior to the end of calendar year 2007.