Costco Wholesale Corp said it plans to close its two Costco Home stores on July 3, citing the current economic slowdown and resulting weakness in the home furnishings business.

The retailer said it expected no layoffs as a result of the Kirkland, Washington, and Tempe, Arizona, store closings, adding that there would be no significant impact on operations or financial results. Its shares were up more than 3 percent in morning trading.

The current economic slowdown and resulting weakness in the home furnishings business in particular have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans, Costco Chief Executive Jim Sinegal said in a statement on Thursday.

The slowdown in consumer spending has hurt sales at higher-end stores. Top home-improvement retailer Home Depot Inc recently closed its more upscale Expo Design Center.

Retail consultant Retail Forward and PricewaterhouseCoopers released a study last week that predicted retail sales growth would be flat this year as job losses, tighter credit and a weak housing market have consumers continuing with conservative shopping habits.

Costco, the No. 1 U.S. warehouse club, said last month that its February sales at clubs open at least a year, or same-store sales, fell 3 percent, more than the 2.7 percent decline analysts had been expecting.

Costco's shares were up $1.67, or 3.6 percent, at $48.01 on Nasdaq.

(Additional reporting by Ajay Kamalakaran in Bangalore; Editing by Maureen Bavdek)

Arizona