Costco stock falls on sales miss; retailer says it found ‘material weakness’ in financial reporting

Costco stock falls on sales miss; retailer says it found ‘material weakness’ in financial reporting

Shares of Costco Wholesale Corp. COST, -0.65% fell nearly 4% in the extended session Thursday after the retailer missed revenue expectations for the fiscal fourth quarter and said it expects to find “material weakness” in internal controls over financial reporting when it releases its annual report soon. Costco said it earned $1.04 billion, or $2.36 a share, in the quarter, compared with $919 million, or $2.08 a share, in the year-ago period. Net sales reached $43.4 billion, a 5% increase from $41.4 billion a year ago. Analysts polled by FactSet had expected earnings of $2.36 a share on sales of $44.2 billion for the quarter. Costco said it was still reviewing its internal controls but the weakness identified related to “general information technology controls in the areas of user access and program change-management over certain information technology systems that support the Company’s financial reporting processes,” it said. “As of the date of this release, there have been no misstatements identified in the financial statements as a result of these deficiencies, and the company expects to timely file its Form 10-K,” and “remediation efforts have begun,” it said. Costco shares had ended the regular session down 0.7%.

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