How Would Costco Wholesale Corporation (NASDAQ:COST)’s Weak March-Sales Affect Investors?

Costco Wholesale Corporation (NASDAQ:COST) has witnessed a drop in overall sales during March 2015, once the giant was blemished by drop in sales owing to a wrong timing, prior to Easter.

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Sales Fell Internationally

The company’s sales garnered from stores fell by a meek 2% until April 05, 2015. It has been reported that Thomson Reuters that the company has missed the analysts’ target by 1.2%. Though the stocks fared almost neutrally in the US markets, it received a setback in the international arena, as sales fell significantly, as much as 9%.

Tie Up With Alibaba

Costco has tied up with online retailer Alibaba Group Holding Ltd (NYSE:BABA)’s online seller Tmall Global platform. The association was reached with an agreement between the two entities sometime before the Easter holidays in 2014. Consequently, the time is not ripe; hence comparable sales dropped significantly by a range of 1-1.5 per cent.

The Costco authorities revealed that there were a plethora of reasons behind drop in the comparable sales accounts. The company has emerged as a top notch performer retailer in the US parlance, just after the prestigious Wal-Mart Stores, Inc. (NYSE:WMT).

What’s Favourable And What’s Not!

Apart from deflating gas prices, the foreign exchange too has been unfavourable and both together affected the net sales. At one point, the condition was grim, however the company pulled itself up and managed to increase profits by a margin of 4%. Over the past few months there has been a steady decrease in fuel prices and innate costs, sharply. The prices of fuel that it was notching up from consumers were way more than the costs levied in paying for the gas; the latter was falling faster. The magnitude by which the company had dropping profits, were somewhat balanced by the dynamic plunges in fuel prices.

Costco is adamant in adopting stronger moves to better its profits. It has focus on customer service and guarantees satisfaction, thus notching up repeat customers. The good aspects override the blemishes; it’s not a warning for investors.

 

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John Eisler

John Eisler

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.