<span class="articleLocation”>Warehouse club retailer Costco Wholesale Corp (COST.O) reported lower-than-expected quarterly comparable-store sales and profit as big grocery chains competed fiercely to attract customers with lower prices.
The company’s shares fell about 4 percent to $170.80 in extended trading on Thursday.
Price war in the industry has intensified, with Wal-Mart Stores Inc (WMT.N) reportedly running a new price-comparison test to knock out competition from grocery chains and big-box retailers.
The cut-throat competition has already hit supermarket operator Kroger Co (KR.N), which reported its first decline in quarterly comparable sales in 13 years on Thursday.
Costco’s total same-store sales rose 3 percent in the second quarter ended Feb. 12, excluding the impact of changes in gasoline prices and foreign exchange.
Analysts on average were expecting 3.2 percent growth, according to research firm Consensus Metrix.
Costco said it would raise annual fees by $5 to $60 for Goldstar and business members and by $10 to $120 for executive memberships from June 1.
The fee increases will impact around 35 million members, roughly half of them executive members, the company said.
Membership fees accounted for about 72 percent of the Costco’s operating income in 2016, according to the company’s latest annual filing.
Net income attributable to Costco fell to $515 million, or $1.17 per share, in the latest quarter from $546 million, or $1.24 per share, a year earlier.
Excluding items, Costco earned $1.17 per share, while total revenue rose 5.7 percent to $29.77 billion.
Analysts on average had estimated adjusted earnings of $1.36 per share and revenue of $29.86 billion in the quarter, according to Thomson Reuters I/B/E/S.
Costco performed well in the last two quarters, despite a tough environment for retailers, as it partly benefited from paying lower fees to credit card partner Visa Inc (V.N).
The company completed the switch to Visa from American Express Co (AXP.N) during the fourth quarter last year.
(Reporting by Gayathree Ganesan and Sruthi Ramakrishnan in Bengaluru; Editing by Anil D’Silva)