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U.S. stock indexes extended their losses, with the Nasdaq down 1% and the S&P 500 down 0.48%.Walmart (WMT.N) shares rose on Tuesday, pushing its market capitalization past the $1 trillion mark for the first time, joining the ranks of companies typically represented by large tech giants. Year-to-date, the stock is up 12%, outperforming the S&P 500s 1.9% gain. Walmarts massive scale and supplier network allow it to maintain low prices and continue to capture market share across income levels. While maintaining its attractive value proposition, its online business is drawing in more high-income consumers seeking convenience. Recent investments in artificial intelligence have further boosted the stock price. Walmart is pushing to integrate AI into all aspects of its operations, currently using it to accelerate processes ranging from scheduling to supply chain management. Earlier this year, Walmart announced a partnership with Alphabet to offer an AI-enhanced shopping experience on Googles Gemini platform; more recently, it partnered with OpenAI to allow consumers to browse and purchase its products directly through ChatGPT. Last month, Walmart was included in the Nasdaq 100 index, highlighting investor confidence in its technological initiatives.Blackstone Group President Jon Gray: Despite the risks, large language modeling and software companies still hold immense value.Blackstone Group President Jon Gray: We are incorporating artificial intelligence approaches into "everything we do".Blackstone Group President Jon Gray: Better data will enable the Federal Reserve to lower interest rates over time.

Costco Margins Are Impacted by Growing Freight And Labor Expenses, And The Stock Price Falls

Charlie Brooks

May 27, 2022 09:50

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Costco Wholesale Corp (NASDAQ:COST) announced a decline in gross margins on Thursday, impacted by rising freight and labor expenses across the United States. The news sent shares of the membership-only retailer down 2% and overshadowed an otherwise positive quarterly report.


Fresh COVID-19 lockdowns in China and the Russia-Ukraine conflict have compounded the problem for U.S. businesses.


Costco announced that it would increase prices in certain food categories in order to battle inflation.


Retailers such as Walmart (NYSE:WMT) Inc and Target Corp (NYSE:TGT) have warned that decades-high inflation will have a negative impact on their earnings, as shoppers hesitate from purchasing non-essential and high-margin goods.


The average Costco buyer earns more than the average Walmart and Target shopper, allowing Costco to generate quarterly earnings and revenue that easily exceeds expectations.


Memberships and sales have been boosted by the company's efforts to keep gas prices several cents below the national average.


Costco, in contrast to Walmart, reported that there has not been a significant shift from branded products to its private label product, Kirkland Signature.


"We aren't really observing a decline in commerce. This year, more money is being spent on tickets, dining out, travel, tires, and gasoline "In a post-earnings conference call, Robert Nelson, senior vice president of finance and investor relations, said.


Costco's gross margins decreased by 99 basis points in the third quarter.


According to data from Refinitiv IBES, Costco's total sales for the quarter ending May 8 increased by 16 percent to $52.60 billion, surpassing analysts' projections of $51.71 billion.


Excluding adjustments, Costco's earnings per share were $3.17, exceeding analysts' expectations of $3.03.

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