Discount retailers have been bright spots in the beleaguered economy here lately, but even they are revealing themselves to be far from bulletproof. Costco's (NASDAQ:COST) latest quarter wasn't really incredibly exciting.  

Costco's first-quarter net income was just about flat at $262.5 million, or $0.60 per share. Net sales increased 4% to $16.04 billion, and same-store sales increased by a mere 1%. The results were reduced by $0.05 per share in various charges, and the strength of the dollar negatively affected the quarter by $0.03 per share.

In the company's press release, CFO Richard Galanti gave some added detail about the quarter. First he said that the fiscal quarter was helped by strong gasoline profitability, which might give one pause -- after all, I think we've all noticed the prices at the pump have been dropping and maybe folks won't be quite as obsessed by Costco's low-priced fuel if that continues.

Results were also hurt by slower sales in non-food discretionary goods and related reductions in margins. That sounds like another "uh-oh," of course, since it pretty much underlines what so many of us already know -- consumers are really hunkering down and emphasizing essentials.

The current recession is a serious one, and continues to show signs of getting deeper. So of course Wal-Mart (NYSE:WMT) isn't absolutely recession-proof, Target (NYSE:TGT) has been a discount disappointment, and Sears Holdings (NASDAQ:SHLD) is just downright scary. If consumers are that nervous, with some in dire straits financially, then it's going to be difficult for anyone to coax them into buying anything but the barest of necessities -- and even those items are going to have to have enticingly marked-down prices.

Still, I'd say the discounters are in a far better position right now than luxury retailers like Nordstrom (NYSE:JWN), Saks (NYSE:SKS), and Abercrombie & Fitch (NYSE:ANF). In fact, Abercrombie & Fitch actively avoids cutting its prices, which could be suicide in the current consumer climate, one that is far worse than the 2001 recession.

Costco's price-to-earnings ratio in the teens might look a bit pricey in an environment where so many retailers are trading at single-digit multiples. But I believe premiums are in order for the best-positioned companies, and Costco strikes me as one of those. Indeed, I consider it best-in-class when it comes to bright, principled management that always thinks long term. Costco continues to be a quality stock for investors' portfolios, and any weakness in the price just gives investors better opportunities to pick up shares.

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