Stock

Costco beats estimates as high COVID-19 costs weigh on shares

(Reuters) – Costco Wholesale Corp (O:COST) recorded high coronavirus-related costs for the second straight quarter, overshadowing its better-than-expected results and sending the company’s shares down 3% in extended trading on Thursday.

The warehouse chain spent about $281 million on employee bonuses and sanitizing its warehouses in the fourth quarter, mirroring a trend of rising costs across U.S. retailers during the health crisis.

Costco had estimated in May that COVID-19-realted costs would exceed $100 million, but would be lower than the $283 million incurred in the prior quarter.

“$281 million is over $100 million but quite a bit larger,” Chief Financial Officer Richard Galanti said on an earnings call.

The company cited the $2-an-hour premium paid to employees as a factor for the jump in costs. The bonus costs Costco $14 million a week.

“We’ve committed to doing that at least through, I believe, the first eight weeks of this fiscal quarter,” Galanti said.

Several U.S. retailers, including Kroger Co (N:KR) and Amazon.com Inc (O:AMZN), have come under fire for stopping hazard pay for their workers.

Higher demand for fresh produce, appliances and gardening and sporting goods helped Costco’s total revenue climb 12.4% to $53.38 billion in the quarter ended Aug. 30, beating the average estimate of $52.08 billion, according to Refinitiv data.

Traffic at the warehouse chain, where customers typically buy items in bulk at lower prices, also ticked up in the quarter, after declining about 20% in April, as COVID-19 restrictions eased and it brought back food samples.

Revenue from memberships rose 5.3% to $1.11 billion, while online sales nearly doubled.

Excluding items, Costco earned $3.04 per share, beating estimates of $2.84.

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