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2017-10-11

  • batbeer2 commented on Sangara Narayanan's article 10-11 12:04
    Costco Just Became Even More Attractive
    Despite beating expecations for the fourth quarter, Costco Wholesale Corp. (COST) lost nearly 6% after the market closed on Oct. 6.  Why did the...
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    batbeer2 10-11 13:04
    • Thanks for sharing. 

      I agree with your conclusion but not with your analysis. You say:

      The gross margin declined 15 points during the quarter, but that should be considered normal in the current retail landscape. At a time when most retailers’ margins are shrinking as they deal with disruptive e-commerce growth, a slight margin hit does not justify the sharp decline in stock price.

      Well, Costco is not a retailer. It is a wholesale club. The stated goal of the company is to reduce gross margin to the point that there is no differece between the price of the product and the wholesale price of that product. In other words, Costco does not want a retail margin. It charges just enough to keep the lights on and the cashier paid (paid well I might add).

      So Costco has just announced that it has just become better at doing what it says it wants to do and the stock is down?! That's absurd.

      Also, Costco announces that its members are willing to pay more for their membership... DoH. Again, the stock goes down because of this?! 

      just thoughts

2012-04-22

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