Costco Had Strong Earnings, Press Covering Wrong, Jim Cramer Says

Jim Cramer says Costco had a strong quarter 'masquerading as a weak quarter.'
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Well, Jim Cramer did tell you that the first trade after Costco earnings would send the stock lower.

Costco fell around 1.8% immediately after reporting earnings after the bell Thursday. The bulk retailer reported earnings per share of $1.89, missing expectations of $1.96. Revenue of $36.45 billion also came in slightly below expectations of $37.02 billion, though it did come in slightly ahead of the $33.96 billion brought in during the same quarter last year.

As an essential retailer, Costco saw increased sales of paper products, cleaning products and food, with the average transaction rising 9.3% from the prior year. Membership revenues also rose 5% to $815 million.

Despite strong sales as consumers stockpiled staple goods amid the coronavirus pandemic, Costco saw significant increases in sanitation and wage costs related to the pandemic.

"The quarter included that big $283 million number ... we spent about $32 million on masks, gloves and incremental cleaning and cleaning supplies and things like Plexiglass partitions and you name it are related to COVID, but that's in that $283 million number," Costco CFO Richard Galanti said during the earnings call.

Costco is still up around 6% year to date. 

Jim Cramer said the Costco quarter was "a very strong quarter masquerading as a weak quarter." 

Cramer added that at the end of the day, the press just doesn't know how to cover Costco. Catch Cramer's full take on the earnings in the video above.

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