Costco Wholesale Corp. (COST) warned Wednesday that its fiscal second-quarter earnings are likely to come in "substantially below" analysts' expectations as sales and margins have been hurt by general economic conditions.

Chief Financial Officer Richard Galanti also said the company wouldn't be issuing earnings guidance for the remainder of the fiscal year "given the uncertainties surrounding the economy, including consumer behavior." The company's fiscal second quarter ended on Feb. 15.

In a statement, Galanti said that margins have been hit primarily in the non-food and merchandise categories because of "aggressive merchandise pricing...to drive sales and increase market share, particularly during the first four weeks of the fiscal quarter."

Analysts polled by Thomson Reuters expect earnings of 70 cents per share when Costco releases its financial statements for the quarter on March 4.

Following its fiscal first-quarter financial report in December, Costco said it doesn't expect to meet second-quarter projections, but the uncertainty around how bad it's going to be sent shares of the warehouse club down 6.2% Wednesday to $43.27 and weighed heavily on the broader retail sector.

Costco has also been hit by lower year-over-year profits from its gasoline business and the strengthening U.S. dollar, which ate into gains from its international operations.

The company said its wholesale same-store sales fell 2% in January from a year earlier. Same-store sales in the U.S. were flat while international sales were down 9%.

While Costco has held up relatively well in light of the economic downturn, industry watchers said the announcement didn't come as a complete surprise. A painful combination of mounting unemployment numbers and losses in the stock market have weighed heavily on consumers.

"When the consumer is being hurt like this, there aren't a lot of places to hide," and even strong companies will be hit, said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm based in New York.

"Costco is a bit of a victim of its own success," said FTN Equity Capital Markets analyst Charles Cerankosky. In the past, the company has been successful in luring customers with a wide range of discretionary items ranging from electronics to jewelry to apparel. But as the economy has worsened, customers have cut back on buying such unnecessary goods.

"They have historically done better [with discretionary merchandise] so now when those products aren't moving off the shelves, their bottom line is going to get hurt," Cerankosky said.

Costco's announcement also follows recent negative trends at its competitors. Its peers have yet to release January same-store sales number, but the previous month's results indicated a slowdown at other warehouse clubs. BJ's Wholesale Club Inc. (BJ), which reported seven straight months of double-digit growth in same-store sales through October thanks in part to then-high gasoline prices, struggled in December. Its 1.6% growth was the lowest in a year. Wal-Mart Stores Inc.'s (WMT) Sam's Club also saw a decline in December as same-store sales including fuel fell 3.2%.

-By Kejal Vyas; Dow Jones Newswires; 201-938-5460, kejal.vyas@dowjones.com