(Reuters) -Costco Wholesale missed Wall Street expectations for third-quarter revenue on Thursday, as consumers grappling with rising living costs pared back on large purchases, especially of non-essential goods such as home furnishings.

The membership-only retail chain has taken a hit as hefty tariffs have fueled fears of a potential recession and price increases, pushing people to rethink their spending patterns.

U.S. consumer sentiment slumped to a nearly three-year low in May, with one-year inflation expectations surging to levels last seen in late 1981.

Costco’s results come amidst an uncertain retail environment, with behemoth Walmart saying earlier this month it would have to raise prices to deal with tariffs even as it maintained its full-year forecast; on the other hand, Target slashed its annual outlook but opted not to raise prices, calling it “the very last resort.”

Private Label Products Drive Comparable Sales Growth

However, the popularity of Costco’s private label products, which tend to undercut higher-priced branded alternatives, and consumers stocking up on essential goods amid the economic uncertainty, have helped the company beat expectations for comparable sales in the quarter.

Same-store sales, excluding gas, rose 8% for the quarter ended May 11, compared to an estimate of a 6.96% increase, according to data compiled by LSEG.

Mixed Financial Results Despite Revenue Miss

The company’s quarterly revenue rose 8% to $61.96 billion, missing analysts’ average expectations of $63.19 billion.

Excluding items, Costco earned $4.28 per share, slightly above analysts’ estimate of $4.24 per share.

Shares of the company, which were up about 10% this year, rose marginally in extended trading.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Alan Barona)