Costco Sees Profit Below Estimates; Plans Buyback

Not logged in [Log In] [Sign Up] [Points Leaders] [My Profile]

Wednesday, August 20, 2008 4:34:01 PM

Featured Sponsor

Save 5% on gas All gas purchases get a 5% rebate with the Discover Card* Click here for more info


Add gas prices to your web site. Click here to find out how!

GasBuddy News Article

Costco Sees Profit Below Estimates; Plans Buyback Wednesday, July 23, 2008
Bloomberg -- July 23 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. warehouse-club chain, said earnings will be ``well below'' analysts' estimates after surging energy prices increased the retailer's costs and made selling gasoline less profitable. Costco kept prices lower than planned to retain customers, Chief Financial Officer Richard Galanti said today in a statement, sending the shares down 9.7 percent in early New York trading. The Issaquah, Washington-based company also said it plans to buy back an extra $1 billion of its stock.
Visit Bloomberg for full article

Message Forum - Read Message

Category: Daily News Article Discussions > Topics		Add to favorite topics Post New Topic
Rate this topic: Low 1 - 2 - 3 - 4 - 5 High Avg rating: 0.0 (0 votes)

Author	Topic: Costco Sees Profit Below Estimates; Plans Buyback	Post a Reply Back to Topics

JT Moderator	Message Posted: 7/23/2008 10:58:07 AM	Ignore JT Report Abuse
	Wednesday, July 23, 2008 Bloomberg -- July 23 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. warehouse-club chain, said earnings will be ``well below'' analysts' estimates after surging energy prices increased the retailer's costs and made selling gasoline less profitable. Costco kept prices lower than planned to retain customers, Chief Financial Officer Richard Galanti said today in a statement, sending the shares down 9.7 percent in early New York trading. The Issaquah, Washington-based company also said it plans to buy back an extra $1 billion of its stock. Visit Bloomberg for full article

REPLIES (newest first)

First

Next Last

FarmTech Champion Author Virginia Posts:3,742 Points:765,105 Joined:May 2006	Message Posted: 7/25/2008 5:56:15 AM	Ignore FarmTech Report Abuse
	tz2001, Love your post. ======= no1lakersfam, Where are the FACTS and figures that support your statement, QUOTING: ""Keeping prices lower than planned?" Even with that they are the most expensive warehouse club out there." END Quote. See my response to member "franconia" below for more details and know that I have researched a number of discount warehouses/clubs--most notably Sam's Club--and find that Costco is the same OR LESS than they are. This goes for just about any other clubs. While Costco may NOT be the absolute lowest price you will find on any one item they may sell, it is a very good bet that they are so close to the competition that it does not matter. When you factor in such items as: 1) that is their Every Day Price, AND 2) their very generous customer satisifaction and returns policy, PLUS 3) an Executive Member can get an additional 1 percent annual rebate back on just about everything they sell, then they are the hands down winner. It is usually only special sale discounts at some speciality merchant that would be cheaper. For example, Circuit City may sell a CD or DVD with their weekly ad that would be less than at Costco. Certain clothing retailers may have a similar item on sale. However, these are limited sales and not the everyday price. Therefore, I have found that not only does our family save a lot of time spent searching for deals, we have saved enough to be able to buy a boat. ======= franconia, Do your homework and I would advise that you learn about something before you post it. As a Costco shareholder and one who was a member when it was known as The Price Club, I am very knowledgeble about their operations. First, Costco must charge a membership fee for several reasons. The most important is that they do not sell at retail and without getting into a whopping pile of details, Federal and nearly all State laws state that merchants can NOT do that. It actually goes back to arcane price-fixing laws. They are a private membership club and that LEGALLY allows them to sell their merchandise at prices basically just over wholesale. As for making money, it depends on the item. In general, after all expenses are paid, Costco makes about 3 percent. On some items, it can be more. As for the gasoline sales, those are now not making any profit. Costco was making about 1 cent per gallon in the state of VA. Now, they are selling it so that it just covers all of their operational expenses. From time to time (which usually WAS when they first opened a gas station), Costco had sold at a 1 to 2 cent per gallon loss.
DFleming Sophomore Author Virginia Posts:247 Points:52,345 Joined:May 2008	Message Posted: 7/24/2008 11:05:08 AM	Ignore DFleming Report Abuse
	That's scary when the economy shopping giants start feeling the pinch.
WreckDiver59 Sophomore Author Detroit Posts:138 Points:56,490 Joined:May 2008	Message Posted: 7/24/2008 11:00:06 AM	Ignore WreckDiver59 Report Abuse
	The point in joining a warehouse club is to save money. If they don't make as much, the're giving you what you're supposed to get with your membership.
bbthegun All-Star Author San Diego Posts:733 Points:384,565 Joined:Sep 2006	Message Posted: 7/24/2008 10:57:23 AM	Ignore bbthegun Report Abuse
	Costco is very solvent and doing just fine.
FASTER345 Rookie Author Los Angeles Posts:34 Points:203,310 Joined:Apr 2006	Message Posted: 7/24/2008 10:50:32 AM	Ignore FASTER345 Report Abuse
	In my area (Los Angeles) Costco gas costs more than most Arcos and about the same as most Valeros. So there you go.
eaglechick Rookie Author Richmond Posts:45 Points:21,855 Joined:Aug 2006	Message Posted: 7/24/2008 10:49:19 AM	Ignore eaglechick Report Abuse
	It seems the only ones profiting lately is the oil companies. "Record" profits to be exact.
Jeannemarie Champion Author Las Vegas Posts:13,331 Points:926,435 Joined:Aug 2005	Message Posted: 7/24/2008 10:45:19 AM	Ignore Jeannemarie Report Abuse
	Buy back generally raises stock values. Hopefully.
jeepster23 All-Star Author Massachusetts Posts:884 Points:295,750 Joined:Jan 2007	Message Posted: 7/24/2008 10:43:53 AM	Ignore jeepster23 Report Abuse
	Poor Costco
Shiff Champion Author Pennsylvania Posts:1,042 Points:323,430 Joined:May 2006	Message Posted: 7/24/2008 10:41:01 AM	Ignore Shiff Report Abuse
	The Costco here in the Lancaster, PA, area sells gas at usually a few pennies or so less than the other stations. Lines can be long.
Don20 Champion Author Oklahoma City Posts:1,085 Points:924,265 Joined:Mar 2005	Message Posted: 7/24/2008 10:38:55 AM	Ignore Don20 Report Abuse
	If you buy gas everyone's savings is down..
goose28in Veteran Author Detroit Posts:360 Points:74,565 Joined:Apr 2008	Message Posted: 7/24/2008 10:38:38 AM	Ignore goose28in Report Abuse
	Well that sucks.
EarlyMoose Champion Author Seattle Posts:1,490 Points:619,715 Joined:Dec 2005	Message Posted: 7/24/2008 10:37:27 AM	Ignore EarlyMoose Report Abuse
	I'll think about that when I go to Costco today.
Howmuchtofillit All-Star Author Trenton Posts:782 Points:131,220 Joined:Sep 2005	Message Posted: 7/24/2008 10:34:58 AM	Ignore Howmuchtofillit Report Abuse
	BOO HOOO, Hey I saw my savings lower then I predicted also.
bauerboy Sophomore Author Seattle Posts:136 Points:284,370 Joined:Apr 2003	Message Posted: 7/24/2008 10:34:12 AM	Ignore bauerboy Report Abuse
	Stock price down 15% in 2 days and Ford's value down 8% today due to fuel costs.
franconia Sophomore Author Madison Posts:158 Points:656,770 Joined:Jan 2005	Message Posted: 7/24/2008 10:30:53 AM	Ignore franconia Report Abuse
	Supposedly Costco really only makes money on the membership fees and breaks even on the other stuff - they are opening a location near me next month so I am anxious to see if the gas is cheaper than the rest of the market.
Phantomwalker Rookie Author Nova Scotia Posts:9 Points:865 Joined:Jul 2008	Message Posted: 7/24/2008 10:30:52 AM	Ignore Phantomwalker Report Abuse
	We have Costco's here but none of which sell gas. To bad for me I guess
HockeyLady All-Star Author New Jersey Posts:877 Points:851,080 Joined:Jun 2005	Message Posted: 7/24/2008 10:29:27 AM	Ignore HockeyLady Report Abuse
	too far away from me
UTOrangeMan Champion Author Atlanta Posts:1,536 Points:137,425 Joined:Mar 2008	Message Posted: 7/24/2008 10:27:17 AM	Ignore UTOrangeMan Report Abuse
	I wish I had a billion to buy stock.
JB1881 Champion Author New Mexico Posts:1,183 Points:311,585 Joined:Aug 2007	Message Posted: 7/24/2008 10:27:12 AM	Ignore JB1881 Report Abuse
	So it's the oil companies falt that Costco sells gas cheaper than everyone else?
Dale Jr. Champion Author Iowa Posts:7,555 Points:1,520,950 Joined:May 2004	Message Posted: 7/24/2008 10:26:18 AM	Ignore Dale Jr. Report Abuse
	There are no Costco's where I live.
RC_RACER All-Star Author Tacoma Posts:762 Points:186,900 Joined:Jun 2004	Message Posted: 7/24/2008 10:25:49 AM	Ignore RC_RACER Report Abuse
	thanks big oil, this is going to be the norm for 2008 and on.
AuburnTim All-Star Author Indiana Posts:934 Points:284,165 Joined:May 2005	Message Posted: 7/24/2008 10:25:29 AM	Ignore AuburnTim Report Abuse
	Not surprising I don't spend any money on anything but gas and food and whatever I save there is eatin up when I pay my bills electricity and gas those are up big time too. So I don't have anything to spend so its not surprising that companies are going to report losses cause I am not alone
woos777 Champion Author Washington Posts:1,158 Points:580,130 Joined:Sep 2006	Message Posted: 7/24/2008 10:24:09 AM	Ignore woos777 Report Abuse
	Well put PokerAce
SlugBuggy Sophomore Author Colorado Springs Posts:173 Points:70,985 Joined:Apr 2008	Message Posted: 7/24/2008 10:24:07 AM	Ignore SlugBuggy Report Abuse
	"So is it the lower gas sales or the lack of people driving there to spend money . . ." I'd say it's a combination of both. With less discretionary income, folks aren't as inclined to spend a lot of money on bulk items they may/may not use in the coming months. When it's a choice between the 5 gallon tub of butter and putting fuel in your vehicle so you can go to work...
tomok Champion Author Portland Posts:7,790 Points:628,110 Joined:Aug 2006	Message Posted: 7/24/2008 10:24:03 AM	Ignore tomok Report Abuse
	I have bought many items at Costco and at good prices - food or otherwise. Costco gas can be cheap or not - depends on the gas stations surrounding the location. thats the purpose of this site - find the cheapest fuel, thats close.
Wolfwings All-Star Author Delaware Posts:540 Points:197,260 Joined:May 2004	Message Posted: 7/24/2008 10:22:53 AM	Ignore Wolfwings Report Abuse
	No Costco's have gas near me
PokerAce All-Star Author Louisiana Posts:951 Points:206,880 Joined:Jan 2008	Message Posted: 7/24/2008 10:22:34 AM	Ignore PokerAce Report Abuse
	Costs costing Costco....
iluna Veteran Author Colorado Springs Posts:331 Points:61,020 Joined:Jun 2007	Message Posted: 7/24/2008 10:22:28 AM	Ignore iluna Report Abuse
	Good question Lonewolftx. We all know it's both, but "they" don't seem to "get it."
kevski All-Star Author Oregon Posts:832 Points:113,080 Joined:Feb 2008	Message Posted: 7/24/2008 10:20:33 AM	Ignore kevski Report Abuse
	not too worried about costco making it
Lonewolftx Champion Author Houston Posts:5,256 Points:1,032,285 Joined:Sep 2005	Message Posted: 7/24/2008 10:20:06 AM	Ignore Lonewolftx Report Abuse
	So is it the lower gas sales or the lack of people driving there to spend money . . .
tbybee Rookie Author Omaha Posts:69 Points:47,660 Joined:Apr 2008	Message Posted: 7/24/2008 10:18:44 AM	Ignore tbybee Report Abuse
	Not a shock -- high energy costs effect everyone.
SeerLV Sophomore Author Las Vegas Posts:159 Points:52,755 Joined:Jun 2008	Message Posted: 7/24/2008 10:17:13 AM	Ignore SeerLV Report Abuse
	COSTCO will survive
dannyshouse Rookie Author San Francisco Posts:1 Points:75,910 Joined:Apr 2008	Message Posted: 7/24/2008 10:16:57 AM	Ignore dannyshouse Report Abuse
	Costco is usually the cheapest in our suburban area just south of San Francisco. Sometimes 30 cents a gallon cheaper than in the local cities. Business is always brisk--they bring in double tankers of fuel at least four times a day!
FizedNH All-Star Author New Hampshire Posts:922 Points:179,780 Joined:Nov 2007	Message Posted: 7/24/2008 10:14:26 AM	Ignore FizedNH Report Abuse
	Bound to happen...
tz2001 Sophomore Author Virginia Posts:103 Points:206,950 Joined:Sep 2003	Message Posted: 7/24/2008 10:14:06 AM	Ignore tz2001 Report Abuse
	What a bunch of whiners. Here is a retailer selling gasoline at a loss and with their free AmEx card you get an extra 3% off the price! Costco sells plenty of high-quality cheese to go with that low-quality whine!
eaglev All-Star Author Oklahoma City Posts:587 Points:254,895 Joined:Jul 2005	Message Posted: 7/24/2008 10:14:00 AM	Ignore eaglev Report Abuse
	Energy cost are hitting eveyone. Wake up Congress pass the bill to allow drilling NOW!!!
Chazzer Champion Author Nevada Posts:7,624 Points:1,640,110 Joined:May 2002	Message Posted: 7/24/2008 10:12:59 AM	Ignore Chazzer Report Abuse
	And almost every other business in the country!
BrianGriffin Veteran Author British Columbia Posts:276 Points:27,980 Joined:Jun 2008	Message Posted: 7/24/2008 10:12:24 AM	Ignore BrianGriffin Report Abuse
	Not a surprise. . . energy prices will have a larger effect on the little guys.
SpruceGuse2 Champion Author Michigan Posts:1,256 Points:771,125 Joined:Mar 2006	Message Posted: 7/24/2008 10:12:04 AM	Ignore SpruceGuse2 Report Abuse
	Oh Well.............................
siouxbear Champion Author Ontario Posts:6,129 Points:477,140 Joined:Aug 2006	Message Posted: 7/24/2008 10:07:13 AM	Ignore siouxbear Report Abuse
	Ifeel real sorry for the big guys what about the mom and pop stores!
roadkillGA All-Star Author Georgia Posts:766 Points:57,240 Joined:Jun 2008	Message Posted: 7/24/2008 10:05:54 AM	Ignore roadkillGA Report Abuse
	Old news
amacquarrie Rookie Author Nevada Posts:71 Points:22,800 Joined:Jun 2008	Message Posted: 7/24/2008 10:04:48 AM	Ignore amacquarrie Report Abuse
	wow - holding back prices, that's a first
t4204life Champion Author Ohio Posts:3,877 Points:773,010 Joined:Jun 2006	Message Posted: 7/24/2008 10:03:47 AM	Ignore t4204life Report Abuse
	hate it when that happens.
Somis1 Champion Author Ventura Posts:4,422 Points:984,775 Joined:Jul 2005	Message Posted: 7/24/2008 10:03:03 AM	Ignore Somis1 Report Abuse
	This shows what a huge gasoline business they do.
Brn2bEvl Veteran Author New York Posts:392 Points:93,100 Joined:Apr 2008	Message Posted: 7/24/2008 10:01:08 AM	Ignore Brn2bEvl Report Abuse
	Poora!Poora! Costco!!! Life is tough!!
Dennis783 Champion Author Wisconsin Posts:5,143 Points:1,031,945 Joined:Sep 2005	Message Posted: 7/24/2008 10:00:42 AM	Ignore Dennis783 Report Abuse
	High energy costs affect everything
no1lakersfam Champion Author Virginia Beach Posts:7,201 Points:1,170,630 Joined:Aug 2004	Message Posted: 7/24/2008 9:58:18 AM	Ignore no1lakersfam Report Abuse
	"Keeping prices lower than planned?" Even with that they are the most expensive warehouse club out there. I know that does not have any bearing on earnings, but everyone is feeling the pinch of the economy.
njteech Champion Author New Jersey Posts:3,954 Points:1,068,860 Joined:Aug 2004	Message Posted: 7/24/2008 9:58:10 AM	Ignore njteech Report Abuse
	Don't have a gas Costco around here....too bad
Egaser Sophomore Author Atlanta Posts:172 Points:95,575 Joined:Apr 2006	Message Posted: 7/24/2008 9:53:41 AM	Ignore Egaser Report Abuse
	Does this mean my gross of pretzels will be higher?