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Costco's 3rd-Quarter Earnings Bulk Up as Consumers Stock Up

May 29, 2003|From Bloomberg News

Costco Wholesale Corp., the largest U.S. warehouse-club store chain, said third-quarter profit climbed 18%.

Net income rose to $153.8 million, or 33 cents a share, from $130.4 million, or 28 cents, a year earlier. Sales in the three months ended May 11 increased 11% to $9.34 billion, the Issaquah, Wash.-based company said.

Sales at stores open at least a year rose 6%, more than at most retailers, as consumers concerned about the economy stocked up on food and household goods sold in bulk. Chateau Lascombes wine at $33.99 a bottle and discounted clothing by designers such as Polo Ralph Lauren have helped to win over shoppers from traditional discounters such as Wal-Mart Stores Inc.

"They're constantly altering the mix. There's a treasure-hunt aspect to shopping at Costco," said Marie Driscoll, an analyst at Argus Research.

Shares of Costco rose $1.43, or 4%, to $37.35 on Nasdaq. The stock has declined 2.9% in the last year.

Costco, which charges shoppers an annual membership fee of $45, had been expected to earn 31 cents a share, the average forecast of analysts surveyed by Thomson First Call.

Wal-Mart, Kohl's Corp. and other retailers have said that April sales were less than forecast as cool weather and rising unemployment sapped demand for Easter merchandise. Wal-Mart's same-store sales, which exclude new and closed locations, rose 2.2% in its first quarter that ended April 30.

Costco expects fourth-quarter profit to rise to 54 cents to 56 cents. Net income was $247.4 million, or 52 cents, a year earlier.

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