Costco Wholesale Corp released its first-quarter results on Thursday, showing that the big box store failed to meet analysts’ estimates as consumers continue to cut spending amid continued inflation.
Total revenue for the quarter was $54.44 billion, narrowly missing analysts’ estimates of $54.64 billion. This translates to an adjusted earning per share of $3.10; short of the forecast $3.11.
Merchandise costs for the warehouse store rose by approximately 9% to $47.77 billion, which is a change that is largely attributed to increased freight and labor costs.
Quarterly revenue for memberships, priced from $60 to $120 per year, increased from $946 million to $1 billion. This income stream provided much relief for the retail giant, considering that memberships account for the majority of the company’s gross margin.
Following the release of its quarterly results, Costco’s shares fell to $480.35 during extended trading.
Costco’s financial slide follows the ongoing trend of most major U.S. retail companies, with major competitors Target Corp and Dollar Tree Inc also experiencing a decline in demand for goods such as toys and electronics as high inflation and price rise drive down consumer spending.