Reply #11: Costco Feels The Pinch

[ozymandius]

Discount retailer lures customers looking for gas and food, but can't get them to buy much else.

Consumers are still flocking to Costco Wholesale, but they're being more focused about their purchases, buying necessities like food and gasoline and foregoing clothing and other discretionary items. While strong gas sales pushed the discount retailer’s profits higher in the first quarter, it was overshadowed by a slump in consumer spending and a robust greenback that hurt sales abroad.

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On Thursday, the warehouse-club operator reported only a slight increase in first-quarter profit and sales, which missed analysts’ forecasts as consumers stick with necessities and shun discretionary items. In addition, the stronger dollar caused pain for the company abroad, especially in Canada, the U.K. and Korea, impacting pre-tax earnings by an estimated $22.7 million, or 3 cents per share.

http://www.forbes.com/markets/2008/12/11/costco-walmart-update-markets-equity-cx_ra_1211markets38.html