Costco grew sales, dropped in margin

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Costco grew sales, dropped in margin

12/14/2018
Costco plans to focus more on investments, despite a declining gross margin

Costco showed off its increase in sales once again, but failed to match last quarter’s gross margin.

The Issaquah, Wash.-based retailer grew sales 10.2 percent during its fiscal 2019 first quarter to $35.1 billion and inked a profit of $767 million, or $1.73 per share, up more than 19 percent. The median estimate of 23 financial analysts following the company was for earnings of $1.63 per share.

The company’s gross margin in the quarter ended Nov. 25 was 10.75 percent, down from 11.25 percent a year earlier. That was despite comparable sales — sales at stores that have been open a year or more — rising a strong 7.5 percent, excluding gas-price changes, the foreign exchange impact and other items.

Costco Chief Financial Officer Richard Galanti said Costco’s management is less worried about small changes in the company’s gross margin —  a measure of how much a company makes for each dollar of sales — while focusing more on investments that can drive the business in the long term and build loyalty.

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