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## Costco’s Shares Decline After Missing Revenue Expectations

By Ananya Mariam Rajesh

### Costco’s Second Quarter Revenue Disappoints Investors

(Reuters) – Costco’s shares closed down 7.6% on Friday for its worst day since May 2022 after the membership-only retail chain missed second-quarter revenue expectations and signaled a negative impact from lower gasoline prices. This downturn in stock value comes as a surprise to many investors who were expecting a more positive outcome.

### Analysts Remain Optimistic Despite Stock Decline

Still, at least seven brokerages raised their price target on Costco, with Jefferies raising the most to $905 after the retailer’s second-quarter revenue rose 6% to $58.44 billion, but fell short of LSEG estimates of $59.16 billion. The optimism from these analysts is a bright spot in an otherwise challenging situation for the retail giant.

### AI legalese decoder Offers Insight into Costco’s Financial Situation

The AI legalese decoder can help investors and analysts make sense of Costco’s financial performance by breaking down complex legal jargon into easy-to-understand language. By utilizing this tool, stakeholders can gain a clearer understanding of the factors influencing Costco’s stock value and make more informed investment decisions.

### Costco Faces Challenges in Retail Sector

“For the past several quarters, Costco had seen a pullback in demand for higher-margin goods such as appliances, home furnishings, and electronics. U.S. retail sales had fallen by the most in 10 months in January as customers remained cautious heading into 2024.” These challenges in the retail sector have contributed to Costco’s recent struggles.

### Strong Same-Store Sales Provide Hope for Costco

However, comparable sales, excluding fuel and currency fluctuations, saw a 5.8% increase benefiting from strong sales for appliances and the retailer’s efforts to lower prices on select products that attracted consumers looking to shop by the penny. This positive trend in same-store sales indicates that Costco remains a competitive player in the retail market.

### Analysts Confident in Costco’s Future Growth Potential

Brokerages believe the retailer is capable of attracting customers in an uncertain environment and driving revenue growth through strong demand, membership fees, and lower prices. This confidence in Costco’s ability to adapt to the changing retail landscape bodes well for the company’s long-term growth prospects.

### Conclusion

Costco shares closed at $725.56 and its median price target is at $780, according to LSEG data. While the recent decline in stock value may be concerning to some investors, the optimistic outlook from analysts and the company’s strong same-store sales provide hope for Costco’s future performance in the retail sector.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Tasim Zahid and Alan Barona)

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