Costco Announces Lower than Expected Third Quarter

Business News

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By Senior Staff Writer Edward F. Lavere

Retailer Costco Reports "Aren't Good" America's largest warehouse club chain and grocer has warned that it expects the fourth quarter earnings to be "well below" expectations. Rising fuewl costs, inflated energy expenditure and higher food costs were sited as the reasons for the current and future predicted dip.

?Factors negatively affecting our fourth quarter earnings outlook arise largely from inflation, particularly as to energy costs, said Richard Galanti, chief financial officer. Analysts predict that though Costco will continue to provide less expensive goods, competitors such as Walmart will contribute to the prediction that Costo will drop at least $1 per share next quarter.

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The group also unveiled a quarterly dividend of 16 cents and said it was increasing its stock buyback program by $1 billion, in addition to the $5.8 billion previously authorized. Shares in Costco were down by 10 per cent in pre-market trading. The company's shares have risen nearly 18 per cent in the past year.

The prediction by analysts is not exclusive to Costco, with other supermarket chains reporting similar, except for super giant Walmart expecting again, to grow.