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Two Ways: Costs Drag Down Costco


Strengthen your portfolio in good times and bad.


Costco's Net hurt by litigation and dollar...

Costco (COST), the discount warehouse retailing giant, reported a 29% drop in third quarter profit due to a decrease in revenue and a litigation settlement over its membership renewal policy. Net income for the quarter ending in May fell to $209.6 million, or 48 cents a share which isn't comparable to the 53 cent estimate analysts were expecting. Revenues dropped 4.9% year-over-year to $15.81 billion vs. $16.16 billion consensus.

The company said in a statement that the litigation charge accounted for $34 million but was mostly non-cash. Higher employee benefits costs due to increased health care usage and a stronger dollar also took its toll on profits. Shares are currently lower in the premarket by 3%.

From the Bull Pen: Keep an eye on Costco. The $47 level could offer support due to a confluence of gapfill, 20 day, and 50 day moving averages. Watch if that level can hold for the first hour after the open. Those bullish can set a sell stop below.

From the Bear Cave: In retail, bears can look to RadioShack (RSH). A check of the daily chart shows nice resistance at $14.50. One can set a buy stop above that level on downside tries.

Quick Check Around the World

Asian trading closed with the India 1.32%, and Nikkei 0.13%.

Glancing towards Europe, we see the CAC -1.13%, DAX -1.08%, FTSE -1.13%

As of 8:10 AM EST, S&P Futures are trading +1 to 892.00, and Nasdaq futures are -1 to 1401.00.

A Look at Commodities

Over in commodities, crude oil is trading +0.12 to 63.57 while gold is -0.70 at 952.60 this morning. Silver is +0.350 to 14.90 and copper +0.10 to 212.20.

The dollar index is +0.5300 to 80.9450.

On the Radar


08:30 Initial Claims
08:30 Durable Goods Orders 0.5%
08:30 Durable Goods Ex- Transport -0.3%
10:00 New Home Sales 363k

Click here for the full trading radar.

Thirsty Thursday! Send me your suggestions for happy hour after the bell. Good luck!

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No positions in stocks mentioned.

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