Many of us believe it would be good to be a discount retailer right now, but Costco's
Third-quarter net income fell 29% to $209.6 million, or $0.48 per share. Revenue decreased 5% to $15.48 billion, and same-store sales also fell 7%. (If you strip out gasoline and currency exchange, comps increased by 2%).
Several elements dragged down Costco's quarterly profit. These included a $34 million (mostly) non-cash charge related to a legal settlement, higher costs for employees' health-care benefits, the stronger dollar, and lagging sales of pricier discretionary items.
That last point is likely one most of us expected; it makes sense that shoppers would be more interested in bulk food and other necessities rather than luxury items such as flat-screen TVs.
Costco's not exactly alone, though. There haven't really been too many retail outliers in the most recent quarterly tidings; many retailers have reported down profits and lagging sales (although Costco didn't beat analysts' expectations, which many retailers, such as American Eagle Outfitters
I can't say it was a great quarter for Costco by any stretch, but I continue to think Costco is one of the best companies -- and stocks -- out there. It's a well-run retailer that attracts many customer demographics, including more well-heeled patrons (and some customers are hard-core fans). Higher costs for health-care benefits may sound like a drag, but really, that just outlines another attractive factor: It's a retailer that treats its employees well, and that's a long-term positive when it comes to having a loyal workforce. Indeed, CEO Jim Sinegal is one of the most Foolish CEOs around, and I have always gotten the impression Costco's management doesn't sweat the short-term stuff, but thinks long-term.
Costco's share price is down 32.7% in the past 12 months, presenting a great opportunity to stock up on the shares of this high-quality company.
For related Foolishness: