Costco Hurt by Discounts?

Costco has been a bright stop in the recession.It makes sense that the wholesale club has done well when consumers are cutting back, buying in bulk and looking for deals as businesses everywhere are laying people off and credit is tight. But the company’s second-quarter results might have revealed a chink in its armor. Earnings were down $90 million from the prior-year quarter, or 27%, and same-store sales fell 3%, Costco’s first comparable-sales dip since 1994, says one article.Price cutting, as well as a decrease in fuel costs, are the main culprits in the damage to Costco’s earnings. So another big irony comes forth in this economy: A company that has built an empire on high-quality goods at low prices and has so far succeeded in the recession because of that formula is now getting hurt because it’s selling things too cheap.