Costco shares dip as results reveal IT systems issue
Costco Wholesale Corp. (COST.O 5.55%) fell in extended trading after saying it expects to soon report a “material weakness” in some of the information-technology systems that support its financial reporting.
Key Takeaways
- The company said it’s trying to fix the problem with its IT systems, which should be done within a year. So far, the review hasn’t found that any of its financial statements will need to be restated because of the issue.
- The big-box retailer took in more revenue from membership fees, but it wasn’t as much as some analysts had expected. Costco hiked fees last year, and most of the revenue from those additional fees goes straight to its bottom line, improving profits.
- Amazon.com Inc.’s (AMZN.O0 decision to raise starting wages in November to US$15 an hour could put pressure on Costco, which pays US$14 an hour and is viewed as one of the top employers in the sector. Costco didn’t address the issue in its statement — executives may say more on the conference call at 5 p.m. ET.
Market Reaction
- Shares fell as much as 5.3 per cent to US$219.38 in extended trading. The shares have gained 24 per cent this year through Thursday’s close.
Source: BNN Bloomberg
https://www.bnnbloomberg.ca/costco-shares-dip-as-results-reveal-it-systems-issue-1.1147773
