Costco Wholesale Corp. investors shrugged off a weaker-than-expected 1.3 percent rise in quarterly profit as the warehouse chain announced plans to open 36 new clubs this fiscal year, including its first two locations in Spain.
Costco earned $617 million, or $1.40 per share, in the 16-week fourth quarter ended Sept. 1, compared with $609 million, or $1.39 per share, in the 17-week period a year earlier. Analysts, on average, were looking for it to earn $1.46 per share, according to Thomson Reuters.
Costs rose 0.8 percent to $31.5 billion, including a 1.8 percent rise in selling, general and administrative (SG&A) expenses. Some of the costs included spending on technology and higher outlays for benefits and workers’ compensation.
Discount chain Family Dollar Stores Inc. said it was taking a cautious approach to 2014 as its shoppers focused on basics. Its sales missed expectations and it relied on cost cutting to deliver a better-than-expected profit. Family Dollar shares were down 2.3 percent to $67.81.
Costco and Family Dollar typically cater to different shoppers. Costco’s U.S. household and business members pay fees of up to $110 per year to shop at its clubs and online. Family Dollar says that more than half of its customers are on some form of government assistance.
Both companies are feeling a little pressure from the U.S. government shutdown. Costco has seen a “downward” effect in the Washington, D.C., area but not overall, Chief Financial Officer Richard Galanti said on a conference call.
Family Dollar Chief Executive Howard Levine said he thinks the confidence of his chain’s shoppers was affected by the threat of the shutdown, uncertainty regarding some government assistance many depend on, as well as uncertainty in the job market and other issues.
The company reported adjusted earnings per share of 86 cents, exceeding the average estimate of analysts of 84 cents, according to Thomson Reuters I/B/E/S. Sales rose 5.8 percent to $2.5 billion, missing analysts’ expectations of $2.56 billion.