Costco Same-Store Sales Down 1% Due to Unfavorable Exchange Rate

I wrote that title like I really know what it means! Maybe I could be a financial journalist!

Anyway, here’s what CNN says about it:

Warehouse chain Costco Wholesale Corp. said Thursday that its same-store sales dipped 1% in October, hurt by unfavorable foreign exchange rates.

Excluding the foreign exchange rates, same-store sales would have climbed 3%. Analysts polled by Thomson Reuters expected a same-store sales increase of 3.6%.

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Retailers have struggled as consumers have curbed discretionary spending due to the ongoing housing downturn, eroding credit, rising gas costs and recession worries. However, warehouse operators had been among those whose sales had not been as heavily hit, as consumers purchased their bulk items in an attempt to save money.

Total sales for the period ended Nov. 2 rose 2% to $5.3 billion. The company said fuel price changes had no material impact on its sales results.

What it means to me is that the stock price is going to go down. That much I’ve figured out.

Here’s what I think it means. First, I understand that same-store sales measures only stores that were open at a previous time, not new stores with nothing to compare to. But are we comparing to last month or last year? I’m guessing last year.

So, it sounds like in actual money coming in, sales were down 1%. But Costco has stores all over the world, so depending on what those other country’s moneys are worth versus the dollar, that could affect how many dollars Costco actually gets. So, I think they’re saying that if you could equal it all out, the sales would’ve been up 3%, which doesn’t sound so bad to me.

But here’s what my friend who works at a bank tells me. See the part where it said “Analysts polled by Thomson Reuters expected a same-store sales increase of 3.6%.”? Well, if your company doesn’t meet the numbers that these “analysts” decided you should meet, then your stock price goes down. Even if you never told the analysts that their imaginary numbers were right!

That’s just stupid and it makes me mad. But I don’t think the stock market cares too much about my anger or my opinion of their brains or lack of.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s