Costco beats estimates as excessive COVID-19 prices weigh on shares

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© Reuters. The unfold of the coronavirus illness (COVID-19) in Pennsylvania

(Reuters) – Costco Wholesale Corp (O:) recorded excessive coronavirus-related prices for the second straight quarter, overshadowing its better-than-expected outcomes and sending the corporate’s shares down 3% in prolonged buying and selling on Thursday.

The warehouse chain spent about $281 million on worker bonuses and sanitizing its warehouses within the fourth quarter, mirroring a pattern of rising prices throughout U.S. retailers throughout the well being disaster.

Costco had estimated in Might that COVID-19-realted prices would exceed $100 million, however could be decrease than the $283 million incurred within the prior quarter.

“$281 million is over $100 million however fairly a bit bigger,” Chief Monetary Officer Richard Galanti stated on an earnings name.

The corporate cited the $2-an-hour premium paid to workers as an element for the leap in prices. The bonus prices Costco $14 million per week.

“We have dedicated to doing that a minimum of by, I consider, the primary eight weeks of this fiscal quarter,” Galanti stated.

A number of U.S. retailers, together with Kroger Co (N:) and Amazon.com Inc (O:), have come beneath hearth for stopping hazard pay for his or her staff.

Increased demand for contemporary produce, home equipment and gardening and sporting items helped Costco’s whole income climb 12.4% to $53.38 billion within the quarter ended Aug. 30, beating the typical estimate of $52.08 billion, in response to Refinitiv knowledge.

Site visitors on the warehouse chain, the place clients usually purchase objects in bulk at decrease costs, additionally ticked up within the quarter, after declining about 20% in April, as COVID-19 restrictions eased and it introduced again meals samples.

Income from memberships rose 5.3% to $1.11 billion, whereas on-line gross sales almost doubled.

Excluding objects, Costco earned $3.04 per share, beating estimates of $2.84.

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