Costco to report 2nd quarter results on Wednesday

Earnings Preview: Costco Wholesale Corp.

PORTLAND, Ore. — Costco Wholesale Corp. reports its second-quarter results before the stock market opens Wednesday.

WHAT TO WATCH FOR: Any signs customers are buying more discretionary items.

Costco, the wholesale buying club based in Issaquah, Wash., has been among stronger retailers during the economic downturn as shoppers flocked to its stores to get deals on necessities like food and healthy and beauty products.

The company said recently that shoppers were slowly starting to buy more nonfood items, such as clothing and housewares but are still spending modestly.

Investors may also be hoping for an update on what appears to be some succession planning as the company announced in February that it created an Office of the President and promoted merchandising executive Craig Jelinek to president and chief operating officer.

Jelinek, along with CEO Jim Sinegal, Chairman Jeff Brotman and Senior Executive Vice President Dick DiCerchio will comprise the Office of the President to lead the company.

WHY IT MATTERS: Costco is the nation’s largest wholesale club, selling a variety of goods from gasoline and furniture to food and clothing. Its breadth and its focus on value make it a measure of consume spending habits in the uncertain economic conditions.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect the company to earn 71 cents per share on revenue of $18.51 billion.

LAST YEAR’S QUARTER: Costco earned $239.7 million, or 55 cents per share, on revenue of $16.84 billion.