Costco Wholesale | $COST Stock | Material Weakness Disclosure Sends Shares Tumbling

1932
Costco Wholesale Store

Costco Wholesale Corp. (NASDAQ: COST)

 

Costco Wholesale announced its fiscal fourth-quarter financial after markets closed on Thursday. Revenue jumped 5%, while earnings came in at $2.36 per share for the three months to September 2, 2018.

Investors felt nervous after the retailer announced a lower than expected revenue, causing its shares to lose as much as 4% in post-market trading.

In its earnings presentation, Costco said it expects to reveal material weakness in its internal control over financial reporting during its annual report. $COST stock, which closed the regular session at $231.68, has gained 24% since the beginning of the year.

COST Earnings

The company said it had net income of $1.04 billion, or $2.36 a share, in the quarter, compared with $919 million, or $2.08 per share, in the same quarter last year.  Revenue grew 5% to $43.4 billion, from $41.4 billion in the prior-year period.

Analysts were expecting adjusted earnings of $2.36 per share on revenues of $44.2 billion for the quarter. Comparable sales jumped 7.2% overall, with Canada and U.S. sales growing 4.6% and 7.8%, respectively. Other international markets recorded comparable sales of 6.9%, while online sales increased 26.3% during the quarter.

Costco Wholesale Company Comments

Costco said in a statement released later Thursday, “While the Company is still completing its assessment of the effectiveness of its internal control over financial reporting as of September 2, 2018, in its upcoming fiscal 2018 Annual Report on Form 10-K, it expects to report a material weakness in internal control. The weakness relates to general information technology controls in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes. The access issues relate to the extent of privileges afforded users authorized to access company systems. As of the date of this release, there have been no misstatements identified in the financial statements as a result of these deficiencies, and the Company expects to timely file its Form 10-K.”

Costco Wholesale Corp. Company Profile

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories.

The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and non-alcoholic beverages, cleaning supplies; appliances, electronics, beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances.

It also operates gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers; and engages in the travel business. In addition, the company provides gold star individual and business membership services.

As of September 3, 2017, it operated 741 membership warehouses, including 514 warehouses in the United States, Washington, District of Columbia, and Puerto Rico, 97 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in Iceland, and 1 in France. Further, the company sells its products through online.

The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington. – Yahoo Finance

IMAGE CREDIT

NO COMMENTS