Costco Wholesale Corp. (COST - Get Report) ended Friday down 5.55% to $218.82 a share after the company missed analysts' earnings forecasts and warned that it had found an unspecified "material weakness" in its internal controls.
Costco said on Thursday after the bell that the weakness "relates to general information technology controls in the areas of user access and program change-management over certain information technology systems that support the Company's financial reporting processes."
Separately, the company reported that its fiscal fourth-quarter net income was $1.04 billion, or $2.36 a share, compared to $919 million, or $2.08 in the same period a year ago. That missed analyst estimates of $2.40 a share.
COST also said that net sales excluding membership fees reached $43.4 billion vs. $41.4 billion a year earlier. While net sales increased almost 5% year-over-year, operating expenses ticked up a notch, causing the company's operating profit to fall by $4 million to $1.45 billion. The earnings report didn't include any updates on forward guidance, but on a bright note, e-commerce sales -- which have been an area of strength for Costco of late -- increased 26.2% year-over-year.
Moffett Nathanson analyst Greg Melich recently told TheStreet that COST's online sales were an important part of the company's 8.3% August sales increase, which was better than the broader industry growth rate of 4% to 5%. But while Costco's online sales grew at a strong clip in the quarter, it's still not quite keeping pace with Walmart (WMT - Get Report) , whose digital business saw a 40% jump in sales during the quarter ended in August.
Costco shares had gained roughly 23% year to date prior to Friday. But now, the stock is only up 16.2% this year.
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