Gas strategy fails Costco earnings

The tactic of offering gasoline sales at warehouse club stores does not seem to be paying off in the current climate of rising gas prices, as two such companies saw the value of their shares drop in early trading on Friday illustrated.

Costco Wholesale Corp., the largest warehouse club operation in the United States, saw shares drop 9 percent on a report that weak profits from gasoline sales will probably send its earnings for the rest of the fiscal year below Wall Street expectations. Another wholesale club operation, BJ’s Wholesale Club, Inc., that offers gasoline sales at many of its stores, also lost ground, falling 6 percent early Friday.

Costco estimated that its current-quarter profits will be between 41 cents and 43 cents per share, below the Wall Street estimate of 46 cents per share. Costco’s estimate for next quarter’s earnings also will most likely fall below Wall Street’s estimate of 70 cents per share, at somewhere between 63 cents and 67 cents per share.