By Sabrina Escobar

Costco Wholesale stock dipped Thursday after the discount retailer's fiscal second-quarter earnings narrowly missed Wall Street's expectations.

The company reported earnings of $4.02 a share for the quarter that ended February, missing analyst estimates for $4.09 a share.

But revenue of $63.7 billion was slightly better than the projection for $63.1 billion. Same-store sales growth of 6.8% topped estimates for a 6.4% increase.

Shares of Costco fell 1.4% to $1,013 in after-hour trading. The stock has gained 12% this year, outperforming the S&P 500's 2.4% decline.

The dip isn't all that surprising. Costco shares are near record highs, trading at nearly 55 times the earnings expected for next year. That premium price tag reflects expectations that nothing but a blowout quarter could meet.

Costco has a call with analysts scheduled for 5 p.m. Eastern time. Investors will be waiting for more details on what may have weighed on Costco's profit growth this quarter, as well as word on how tariffs will affect the business.

"Tariffs raise costs, so that's not something that we see as a positive in general," Gary Millerchip, Costco's chief financial officer, said on a call with investors in December.

President Donald Trump's 25% tariffs on Mexican and Canadian imports went into effect on Tuesday, as did an additional 10% levy on Chinese goods. On Thursday, however, the White House said the U.S. would be pausing tariffs on imports from Mexico and Canada that comply with the U.S. Mexico-Canada Agreement until April 2.

It wasn't immediately clear on Thursday what categories of goods will still be subject to tariffs.

The focus on commentary from Costco comes after Target CEO Brian Cornell said on Tuesday that he expected some prices for produce to move higher in response to the tariffs on Mexico.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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March 06, 2025 16:56 ET (21:56 GMT)

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