Costco yesterday said its financial results for the second half of the year would fall short of Wall Street estimates, as higher gas prices...

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Costco yesterday said its financial results for the second half of the year would fall short of Wall Street estimates, as higher gas prices served to pinch margins.

The Issaquah company’s shares fell 8.8 percent on the news. It reports third-quarter earnings May 26.

The wholesale-club retailer sets its gas prices by aiming to charge the lowest price within up to a five-mile radius. But the company, in a way, is a victim of its own success.

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Costco turns its gas supply so rapidly — its average gas station uses its entire inventory in a day-and-a-half versus seven to 10 days for a competitor — that it becomes more vulnerable to rising fuel prices.

“We’re buying at a higher price and still competing with someone who bought (fuel) at a much lower price seven days ago,” said Paul Latham, Costco’s vice president of membership marketing, who previously ran its gasoline program.

Analysts polled by Thomson Financial in March expected the company to earn a profit of 47 cents per share for the third quarter and $2.11 per share for the fiscal year.

The company said yesterday it expects to earn a profit in the range of 41 to 43 cents for the third quarter and $1.98 to $2.04 per share for the year.

Gas prices have climbed since January and hit record highs yesterday in the Seattle metro area.

The average price for a gallon of self-serve regular unleaded in the United States yesterday was $2.218, according to AAA. Along the Seattle, Bellevue and Everett corridor, the figure reached $2.503.

In theory, Costco should make money when fuel costs go down because it can sell at a lower price sooner than its competitors, who must first use up the fuel supply they purchased at a higher cost.

But the markets haven’t come down. “They have just been rising,” Latham said.

Costco operates 452 warehouses, including 334 in the United States and Puerto Rico.

The company’s shares lost $3.85 to close at $40.17 a share. Still, the company’s stock is up 8 percent for the year.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com