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Costco's 2Q performance misses analysts' estimates

Published on NewsOK Modified: March 6, 2014 at 8:38 am •  Published: March 6, 2014

ISSAQUAH, Wash. (AP) — Costco's fiscal second-quarter net income fell 15 percent, hurt by softer sales of some non-food items, weaker gross margins in its fresh foods business and the impact of weaker foreign currency exchange rates on its international results. The year-ago period was also helped by a tax benefit.

Its latest performance missed Wall Street's view. The stock fell more than 3 percent in morning trading Thursday.

Separately, Costco said sales at stores open at least a year rose 2 percent in February. Analysts polled by Thomson Reuters expected a 2.3 percent increase. The figure climbed 3 percent in the U.S., but dipped 1 percent abroad.

Taking out lower gas prices and foreign currency fluctuation, sales at stores open at least a year increased 4 percent. In the U.S. the metric rose 4 percent. It gained 5 percent internationally.

For the period ended Feb. 16, the wholesale club operator earned $463 million, or $1.05 per share. That compares with $547 million, or $1.24 per share, a year earlier. The prior year period included a tax benefit of 14 cents per share related to part of a special cash dividend that Costco Wholesale Corp. paid in December 2012 to its 401(k) plan participants.

Analysts, on average, expected earnings of $1.16 per share, according to a FactSet survey.

Merchandise costs and selling, general and administrative expenses climbed during the latest quarter. The provision for income taxes increased to $255 million from $185 million.

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