March 6 (Reuters) - Costco Wholesale ( COST ) missed

Wall Street expectations for second-quarter profit on Thursday,

hurt by rising merchandise costs.

The company's shares, which were up 39% in 2024, fell nearly

1% in extended trading.

Costco's earnings results come amid an uncertain retail

environment, with retailers such as Best Buy ( BBY ), Target ( TGT )

and Walmart ( WMT ) issuing cautious forecasts bracing

for price hikes due to tariffs.

While the membership-only retail chain has benefited from

value-seeking customers turning to its aisles for buying goods,

Costco remains vulnerable to trade wars developing from

President Donald Trump's tariffs on imports to the U.S. as well

as from retaliatory measures by the affected countries.

Canada and Mexico, which are under the U.S. tariff radar,

house 109 and 41 of Costco's warehouse stores, respectively,

according to the company. The two countries are the largest

operations following United States and Puerto Rico.

It has also been growing operations in China, which houses

seven of the company's 897 warehouse stores.

Costco is likely to see an impact to merchandise sourcing

and product pricing decisions as tariffs related uncertainty

continues.

Merchandise costs for the quarter ended February 16 rose 9%,

compared with a 5% rise a year earlier.

Costco earned $4.02 per diluted share, missing analysts'

estimate of $4.11 per share according to data compiled by LSEG.

The company's quarterly revenue rose 9% to $63.72 billion,

compared with analysts' average expectation of $63.13 billion.