Updated at 11:42 am EST
Costco Wholesale (COST) - Get Free Report shares moved lower Thursday after the bulk-discount retailer reported weaker-than-expected November sales amid what could be a broader pullback in consumer spending over the final months of the year.
Costco said sales for the four weeks ending on November 27, which included Black Friday, rose 5.7% from last year to $19.17 billion, a sharply slower rate than the 7.7% pace recorded over the month of October and the 10.1% advance the group booked in September.
Same-store sales for the 13 week period were up 6.4%, Costco said, while U.S. comp sales were up 8.8%. For the four weeks ending on November 27, those figures were 4.3% and 6% respectively.
The late autumn slowing echoes comments Brian Cornell, CEO of big box rival Target (TGT) - Get Free Report, who told investors on November 16 that the group saw a "change in shopping behavior in the back half of October leading into November" that he characterized as consumers "working with their budget, shopping very carefully, looking for value, and recognizing they've got to start with core staples before they spend dollars in discretionary categories."
Costco may have also suffered from the overall decline in U.S. gas prices, which have fallen more than 30% since hitting an all-time high of $5.10 per gallon earlier this summer. U.S. same-store sales, in fact, were up 15.8% over the three months ending in August, Costco reported, a surge many analysts put down to its offering of cheaper gas to club members.
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"We believe the higher gas prices this summer and early fall helped Costco take share at the pump and drive incremental traffic as consumers will bypass competitors to take advantage of the clubs lower pricing," said D.A. Davidson analyst Michael Baker, who carries a 'neutral' rating and a $455 price target on the stock. "This in turn drove incremental store traffic."
"But as gas prices moderate and become less of a consumer pressure point, the clubs incremental gallon share gains seems to be moderating, which eliminates a potential traffic driver," he added.
Costco shares were marked 6.4% lower in late-morning trading to change hands at $504.86 each, a move that would trim the stock's six-month gain to around 10.45%.
Costco will publish earnings for the three months ending in November, its fiscal first quarter, on December 8, with investors looking for a bottom line of $3.12 per share on overall revenues of $53.92 billion.
Diluted earnings for the three months ending on August 28, its fiscal fourth quarter, rose 11.7% from last year to $4.20 per share as total revenues rose 15% to $72.091 billion. Membership fees were up 7.5% to $1.33 billion.