Costco profit jumps but results miss expectations

Costco Wholesale Corp. reported a 36% jump in its fiscal second-quarter profit thanks partly to a $74 million boost from tax cuts, but the results fell short of expectations.

The Issaquah, Washington-based company said it had net income of $701 million, or $1.59 per share. That's up from $515 million, or $1.17 per share.

Earnings, adjusted for pretax gains, were $1.42 per share.

The results fell short of the $1.45 per share that the Wall Street analysts surveyed by Zacks Investment Research expected.

The warehouse club operator posted revenue of $32.99 billion in the period, topping Street forecasts. Six analysts surveyed by Zacks expected $32.72 billion.

Costco said its comparable sales, which exclude the impact from brand-new stores, rose 8.4% overall with slower growth in Costco's U.S. stores of 7.1%. Of Costco's 749 stores, 519 are in the U.S. and 98 are in Canada.

Costco’s comparable second-quarter sales in Canada increased 8.7%. Meanwhile, comparable sales – excluding the impact of gasoline sales and foreign currency fluctuations – grew by 2.5% in Canada for the same time period.

Costco chief financial officer Richard Galanti said the company planned to share some of the tax savings with employees, but it wasn't ready to announce details Wednesday.

Costco shares have climbed roughly 1% since the beginning of the year, while the Standard & Poor's 500 index has climbed 2%. In the final minutes of trading on Wednesday, shares hit $187.44, an increase of 12% in the last 12 months.