Costco third-quarter results miss estimates as costs rise

Warehouse club operator Costco Wholesale Corp reported third-quarter results below analysts' estimates hurt by an increase in merchandise costs and other expenses.

Merchandise costs in the quarter ended May 11 rose about 7 percent to $22.55 billion while selling, general and administrative expenses rose about 8 percent.

Net income for the quarter rose to $473 million, or $1.07 per share, from $459 million, or $1.04 per share, a year earlier. Net sales at the largest U.S. warehouse operator rose 7 percent to $25.23 billion. Analysts on average expected a profit of $1.09 per share on revenue of $25.76 billion, according to Thomson Reuters I/B/E/S.

The warehouse retailer, which sells everyday items priced lower than supermarket competitors like Wal-Mart Stores Inc and Target Corp, operates 655 warehouses worldwide.