Costco's Sales Growth Falters

May 27, 2022

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Costco's Sales Growth Falters

Shares of Costco Wholesale (Nasdaq: COST) dropped 2.06% in after-hours trading on Thursday after the membership-only big-box store posed mixed financial earnings.

Financials: Costco posted earnings per share of $3.04 and revenue of $52.6 billion; both were better than expected.

The Good: Net sales increased 16.3% year-over-year and net income was also up from last year.

The Bad: Costco had a lot of problems in the quarter. Total company sales increased 10.8%, which was below estimates. The company has also been battling supply chain challenges and inflation.

Numbers: Costco’s stock is up 20% over the past 12 months, but is down nearly 18% in 2022.

Final Thoughts: Costco still has healthy sales growth, but it does need to address some of these headwinds that are impacting gross margins.

Notables

Notable Earnings Today: Canopy Growth (Nasdaq: CGC), Big Lots (NYSE: BIG), Hibbett (Nasdaq: HIBB), Viomi Technology (Nasdaq: VIOT), Pinduoduo (Nasdaq: PDD).

Notable IPOs Today: Osisko Development Corp. (NYSE: ODV), Millicom International Cellular S.A. Rights (Nasdaq: TIGOR), SaverOne 2014 Ltd. American Depositary Shares (Nasdaq: SVRE).

Notable Equity Crowdfunding Campaigns Ending Today: Nan’s Market (SMBX), Poetica Coffee (SMBX), WeHa Brewing & Roasting Company (MainVest), Green Ninja (StartEngine), Fisher Wallace Laboratories (StartEngine).

Notable Economic Events Today: Core PCE Price Index (8:30 a.m. ET), Goods Trade Balance (8:30 a.m. ET), Personal Income / Spending (8:30 a.m. ET), Retail Investories (8:30 a.m. ET), Michigan Consumer Expectations / Expectation (10:00 a.m. ET).

Gap Suffers Inflationary Loss

Photo by Parker Burchfield / Unsplash

Shares of Gap (NYSE: GPS) fell 13.04% in after-hours trading on Thursday after the clothing and accessories retailer posted negative financial earnings.

Financials: Gap reported a loss of 44 cents per share and revenue of $3.5 billion; both were below estimates.

Oh, Navy: The company faced a lot of headwinds in its Old Navy brand, with higher discounting, inflation, inventory delays, and size and assortment imbalances. This wasn’t the only company segment to struggle as the Gap’s brand was also hurt by “inflationary pressures impacting the lower-income consumer.”

Decline: Comparable sales dropped 14% year-over-year, store sales declined 10%, and online sales fell 17%.

Outlook: As a result of these losses, the company lowered its revenue guidance in the low to mid-single-digit range versus last year, which was below estimates.

Numbers: Gap’s stock is down 37% in the past six months and down 68% over the last 12 months.

Final Thoughts: Gap said it can “navigate this period of acute disruption and build an even more resilient and agile company.” They’ve got a long way to go.

Why the 2022 Stock Market Crash Might Be Over Soon

Yes, the stock market is down for the year, but here are some hopeful signs that things might turn around soon.

Bank on It: Bank deposits are starting to tick up again. This is in spite of interest rates that are still low for savings accounts.

Spending: What inflation? Consumer spending is still high and demand is strong.

Jobs: While there have been some hiring slowdowns, unemployment is still low and the job market is strong.

Final Thoughts: While the stock market downturn could continue, these positive economic factors could be signs that the stock market will recover soon.

Trends to Watch

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