Costco Q4 Profit Tops View; But Reports "Material Weakness" IT Systems

(RTTNews) - Costco Wholesale Corp. (COST) Thursday reported an increase in profit for the fourth quarter, as revenues grew from last year. However, the company said it expects to soon report a "material weakness" in some of the information-technology systems that support its financial reporting.

Costco's fourth-quarter profit rose to $1.04 billion or $2.36 per share from $919 million or $2.08 per share last year.

Total revenues for the quarter rose to $44.41 billion from $42.30 billion last year.

Analysts polled by Thomson Reuters expected earnings of $2.36 per share and revenues of $44.27 billion for the quarter. Analysts estimates' typically exclude one-time items.

Costco said that while it is still completing assessment of the effectiveness of its internal control over financial reporting as of September 2, 2018, in its upcoming fiscal 2018 Annual Report on Form 10-K, it expects to report a material weakness in internal control.

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.

Remediation efforts have begun; the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

The company expects remediation of this material weakness will be completed prior to the end of fiscal year 2019.

COST closed Thursday's trading at $231.68, down $1.52 or 0.65%, on the Nasdaq. The stock further slipped $5.32 or 2.30% in the after-hours trading.
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