Costco’s Stock Price Slumps On News Of Pandemic Expenditures

The share price of Costco Wholesale Corp. (NASDAQ:COST) fell after the big box retailer detailed how much it has spent to introduce protective measures against COVID-19 at its stores worldwide.

The company reported incremental expenses of $281 million U.S. before taxes in the period ended August 30 because of higher wages and sanitation costs. Net income of $3.13 U.S. a share surpassed the consensus estimate of $2.85 U.S. from analysts.

Costco shares fell as much as 3.7% on news of the company’s expenditures. So far this year, Costco’s stock has increased 18%, compared with a 0.5% gain for the S&P 500 Index.

In its earnings release, the company also said it saw a spike in its cash and cash equivalents to $12.3 billion U.S., up from $8.4 billion U.S. in 2019. Sales from membership fees rose slightly to $1.11 billion U.S. in the quarter from a year earlier.

Big-box retailers such as Costco, Walmart (NYSE:WMT) and Target (NYSE:TGT) have seen sales jump since COVID-19 lockdowns started in March. Consumers have been stocking up on food such as beans and rice, as well as clothing and technology for remote work and education.