** Shares of membership-only retail chain Costco COST.O fall 1.4% to $1,012.70 in extended trade

** COST reports Q2 profit below Wall Street expectations, after beating estimates for the past six quarters

** Less-than-expected earnings came amid higher merchandise costs and overshadowed quarterly revenue beat

** COST shares up 12% YTD

(Reporting by Arasu Kannagi Basil in Bengaluru)

((ArasuKannagi.Basil@thomsonreuters.com;))