NEW YORK, New York: Second-quarter profits for Costco Wholesale Corp have failed to align with analysts' estimates, as the warehouse club operator expended more on pandemic perks for employees who worked through the health crisis and for disinfecting its stores.
The profit margins of retailers skid, with several million dollars being funneled into pandemic-related expenses. This comes as a double shock for retailers who had already made massive investments in their supply chains to reduce delivery times, as COVID-19 sparked an increase in online demand.
Since the pandemic struck, Costco employees were offered a premium wage, and beginning in March the retailer lifted the minimum pay to $16 for its hourly workers, a dollar above the pay per hour provided by competitors Amazon.com Inc and Target Corp.
The chain, which draws just a fraction of sales from its online channels and depends mostly on the treasure hunt shopping experience, has been according priority to boosting its online sales over the past year. All in all, online sales recorded an increase of 75.8 percent in the second quarter, as compared to one year earlier.
Costco's net income climbed to $951 million, or $2.14 per share, in the second quarter ended Feb. 14, from $931 million, or $2.10 per share, one year earlier. Analysts projected a profit of $2.45 per share.
Refinitiv IBES data indicated that Costco's total revenue increased to $44.77 billion, as compared to $39.07, surpassing analysts' average estimates of $43.78 billion.
Shares of Issaquah, Washington-based Costco, which shed about 14 percent this year, slid 1.6 percent during extended trading.