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Costco shares ease premarket after fourth quarter results

JP Morgan analysts said the results provided fodder for bulls and bears, saying “with progress on the e-commerce front but pricing, membership growth, and tough compares ahead all remaining battleground issues”
going down
Same-store sales was up 5.7% for the quarter and up 6.2% for September.

Costco Wholesale Corp (NYSE:COST) saw its shares slip in premarket trade, extending losses incurred in late-trading on Thursday after the company released fiscal fourth quarter results.

Its fourth-quarter net income stood at US$919mln, or US$2.08 a share, compared to US$779mln, or US$1.77 a share, in the year-ago period.

The wholesaler said revenue increased to US$42.3bn from US$36.56bn a year ago, which was comfortably above market expectations for US$2.02 a share on revenue of US$41.63bn.

Same-store sales was up 5.7% for the quarter and up 6.2% for September.

Bulls & Bears?

JP Morgan analysts said the results provided fodder for bulls and bears, saying “with progress on the e-commerce front but pricing, membership growth, and tough compares ahead all remaining battleground issues.”

The analysts said uncertain membership growth and heightened competition following Amazon.com Inc.'s (NYSE:AMZN) takeover of Whole Foods present the bear scenario.

“Management tackled the membership growth concern head-on noting that excluding cannibalization from new openings, the average number of members in remaining locations grew by ~4% in 2017," said the broker note.

Costco however did make progress on e-commerce, unveiling two new delivery options and an early effort to leverage customer knowledge from its customer base, the analysts added.

In premarket trade, its shares eased 2.89% at US$162.24.

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