Costco Has Highly Anticipated Earnings Report and Aurora Cannabis Has a Brutal Day
The wholesale retailer will report earnings today and investors are eagerly watching to see how it performs. Expectations are high after peers like Kroger and Walmart’s Sam’s Club have reported great performances. Be careful here. These high expectations mean that a report that looks positive in a vacuum might be an underperformance.
A key aspect of Costco’s report that investors are watching is membership renewal rates. Memberships are a key stream of revenue for the company, and a greater number of members obviously means more shoppers will be in stores. Executives reported that the membership renewal rate was at near record levels in July, so if that number declines look for the company’s stock price to fall.
The Canadian marijuana company saw its stock price fall nearly 30% after a dismal earnings report. It recorded a loss of more than C$3 billion which has added more hurt to a year where the company’s stock price is down nearly 80%.
One of Aurora’s biggest challenges has been its attempt to focus on premium cannabis. The strategy has fallen apart amid the realization the Canadians are more focused on price than quality. Aurora is looking to pivot to a cheaper product, but while they were able to sell 36% more product last quarter, a much lower selling price led to the huge loss. Investors should keep an eye on Aurora to see if the company can better execute this strategy or if it is going to continue its downhill trend.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.