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boosted its quarterly dividend Friday but warned that it won't hit third-quarter and full-year earnings targets.

The Issaquah, Wash., wholesale club operator cited weaker-than-expected gross margins for the earnings shortfalls.

Costco guided toward third-quarter earnings of around 42 cents a share, flat with a year ago and below the 46-cent Thomson First Call analyst consensus estimate. That estimate has itself come down a penny since Costco warned last month that Wall Street's targets were at the high end of its own expectations.

The company also took a chunk out of fourth-quarter estimates, guiding toward earnings of 65 cents a share, a nickel below the First Call consensus.

"Despite satisfactory sales and membership results, and reasonably good expense control, our gross margins were lower than planned, principally from gasoline sales," Chief Financial Officer Richard Galanti said.

But signaling that all isn't lost, Costco boosted its quarterly dividend 15% to 11.5 cents a share, payable May 27 to shareholders of record May 6.

Costco closed Thursday at $44.02.