Costco misses sales expectations, but says it won't raise prices yet

By Neil J Kanatt

(Reuters) -Costco Wholesale missed analyst expectations for third-quarter revenue on Thursday and said it had pulled forward shipments of some goods it had planned to import this summer to lower the impact of U.S. tariffs.

The membership-only retail chain said raising prices would be a "last resort", unlike larger rival Walmart, which has said that it would have to start raising prices later this month.

Target opted not to raise prices, but slashed its annual outlook.

Companies, especially retailers, are grappling with higher costs involved in moving supply chains away from China, which has borne the brunt of U.S. President Donald Trump's tariffs.

That, coupled with muted consumer spending in an uncertain environment, has hit bottom lines. U.S. consumer sentiment slumped to a nearly three-year low in May.

Costco said on the post-earnings call that it had re-routed many goods sourced from countries with large exposure to Trump's tariffs to its non-U.S. markets.

The popularity of Costco's private label products, which tend to undercut higher-priced branded alternatives, and consumers stocking up on essential goods, helped the company beat expectations for comparable sales in the quarter.

"As inflation and supply chain concerns drive more consumers to buy in bulk, warehouse clubs like Costco are gaining traction," said eMarketer analyst Zak Stambor.

Same-store sales, excluding gas, rose 8% for the quarter ended May 11, compared to an estimate of a 6.96% increase, according to data compiled by LSEG.

The company's quarterly revenue rose 8% to $61.96 billion, missing analysts' average expectations of $63.19 billion.

Excluding items, Costco earned $4.28 per share, slightly above analysts' estimate of $4.24 per share.

Shares of the company, which have risen about 10% this year, were flat in extended trading.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Alan Barona)

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