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Costco profit rises 32%, tops forecast

May 30, 2008|From the Associated Press

SEATTLE — Costco Wholesale Corp. reported a 32% jump in its fiscal third-quarter profit Thursday, topping Wall Street expectations, as cash-squeezed customers flocked to its warehouse clubs in search of bargains on food and toiletries.

But Costco shares edged down 26 cents to $72.98 after the company said Wall Street's forecast for the fourth quarter might be too high.

Costco said net income in the three months that ended May 11 rose to $295.1 million, or 67 cents a share, from $224 million, or 49 cents, a year earlier, which included a $30.3-million charge. Sales climbed 13% to $16.26 billion. Including membership fees, revenue rose to $16.61 billion from $14.66 billion.

Analysts surveyed by Thomson Financial had expected profit of 65 cents a share on revenue of $16.35 billion.

Warehouse clubs and discounters such as Wal-Mart Stores Inc. have stood apart from other retailers as consumers, squeezed by record gasoline and food prices, hunt for bargains and buy in bulk.

Costco Chief Financial Officer Richard Galanti said revenue from food items, which constitute about 60% of sales, and gas, which makes up more than 10%, both improved.

Same-store sales, the key retail performance measure of sales at stores open for at least a year, increased 4% in the U.S. excluding gas price inflation. Sales in California, one of the states hardest hit by the housing crisis, were weaker than in other regions, Galanti said.

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