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Now Costco is Hurting Too?

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Wow. I had thought the wholesale clubs and discounters were weathering the economic storm rather well. So Costco's lowered outlook comes as a shock.

“Factors negatively affecting our fourth quarter earnings outlook arise largely from inflation, particularly as to energy costs,” the chief financial officer, Richard Galanti, said in a statement.

The outlook reflects weakness in the company's gasoline operations and slightly lower-than-planned merchandise profits as the company holds back on price increases to drive sales.

Mr. Galanti also said a greater-than-anticipated LIFO charge, which refers to the last-in-first-out method that assumes the most recent inventory purchases or goods manufactured are sold first. During times of rising prices, that results in a charge that eliminates inflationary profits from net income.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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