Costco Wholesale Corporation (NASDAQ:COST) stock rose 3.01% (As on May 26, 11:40:20 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the third quarter of FY 23, impacted by lower consumer spending due to elevated inflation and an uncertain job market. In February, the company’s chief financial officer Richard Galanti investors that Costco was seeing “weakness in what I’ll call big ticket discretionary items” heading into the start of the spring. Net income for the quarter was $1.30 billion, which includes a non-recurring charge to merchandise costs of $298 million pretax, primarily for the discontinuation of the charter shipping activities. Last year’s third quarter net income was $1.35 billion, $3.04 per diluted share, which included a non-recurring $77 million pretax charge, $0.13 per diluted share, for incremental employee benefits. Net income for the first 36 weeks was $4.13 billion, $9.30 per diluted share, compared to $3.98 billion, $8.94 per diluted share, last year.

The reported gross margin in the third quarter was high year-over-year on a reported basis by 13 basis points, coming in at 10.32% as compared to 10.19% number a year earlier. In terms of renewal rates, at third quarter end, the U.S. and Canada renewal rate was 92.6% and the worldwide rate came in at 90.5%.

COST in the third quarter of FY 23 has reported the adjusted earnings per share of $2.93, missing the analysts’ estimates for the adjusted earnings per share of $3.30. The company had reported the adjusted revenue growth of 1.9 percent to $52.6 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $54.57 billion. Same-store sales rose 0.3%, with a 0.1% dip in the U.S. Analysts polled by FactSet expected Costco same-store sales growth of 2.8%. In terms of third quarter comp sales metrics, traffic or shopping frequency remains pretty good, increasing 4.8% worldwide and 3.5% in the U.S. during the quarter. The average daily transaction or ticket was down 4.2% worldwide and down 3.5% in the U.S., impacted in large part from weakness in bigger ticket non-foods discretionary items.

Additionally, the company has declared a quarterly cash dividend on Costco common stock and approved a quarterly increase from 90 cents to $1.02 per share, $4.08 on an annualized basis. The dividend is payable May 19, 2023, to shareholders of record at the close of business on May 5, 2023.