Costco shares slide almost 3% as J.P. Morgan says earnings supported bull and bear case

10/06/17 07:36 AM EDT

Shares of Costco Wholesale Corp. (COST) slid almost 3% premarket Friday, extending their late-session losses from Thursday after posting earnings for its fiscal fourth quarter. J.P. Morgan analysts said the report provided fodder for bulls and bears, "with progress on the e-commerce front but pricing, membership growth, and tough compares ahead all remaining battleground issues. " The bear case rests on uncertain membership growth and heightened competition in the wake of Amazon.com Inc.'s (AMZN) takeover of Whole Foods. "Management tackled the membership growth concern head-on noting that excluding cannibalization from new openings, the average number of members in remaining locations grew by 4% in 2017," said the note. "However, bears will point to 'comp' membership income growth decelerating again this quarter after stripping out the 53rd week, fee hike, square footage growth, FX translation impact, and the living social deal." Where the company did make progress was on e-commerce, unveiling two new delivery options and an early effort to leverage customer knowledge from its customer base, said the note. Shares have gained 4.4% in 2017, while the S&P 500 has gained 14%.

-Ciara Linnane; 415-439-6400; AskNewswires@dowjones.com

 

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10-06-17 0736ET

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