Costco profit rises, Sept sales beat expectations
Friday, 12 October 2007
NEW YORK, Oct 11 (Reuters): Costco Wholesale Corp reported a nearly 5 per cent increase in quarterly profit Wednesday, and the no 1 US warehouse club operator said September sales at stores open at least a year rose a better-than-expected 6 per cent.
The September sales results show a rebound from August, when Costco reported weaker-than-expected sales, hurt by a decline in store traffic that it attributed to extremely high temperatures in California.
Charles Grom, a retail analyst with JP Morgan, said Costco delivered its best quarterly gross profit margin performance in five years, "driving significant, high quality, earnings per share outperformance."
It shares rose 4.3 per cent to $66.05 before the bell Wednesday.
Costco said net income rose to $372.4 million, or 83 cents per share, in the fourth quarter ended on September 2, from $355.6 million, or 75 cents per share, a year earlier.
The 2007 results included non-cash costs of 8 cents a share related to deferred membership revenue liability.
Net sales rose to $20.09 billion from $19.5 billion. Including membership fees, total quarterly revenue was $20.5 billion.
Costco customers pay an annual membership fee to shop at the retailer's stores, which sell everything from toilet paper to diamond rings.
Investors are watching retail sales closely to see how consumer spending holds up headed into the crucial holiday selling season.
Late last month, Target Corp, the no 2 US discount retail chain behind Wal-Mart, said its September sales would fall below a previous view, while Children's Place Retail Stores Inc slashed its third-quarter earnings forecast Tuesday, saying price cuts hurt its margins.
Costco said its sales at stores open at least a year, or same-store sales, rose 5 per cent during the quarter from a year earlier.
For September, Costco said sales at its clubs open at least a year rose 6 per cent. Analysts on average were expecting a 4.7 per cent increase, according to the news agency estimates.
Costco operates 520 warehouse club stores, including 385 in the United States and Puerto Rico.
The September sales results show a rebound from August, when Costco reported weaker-than-expected sales, hurt by a decline in store traffic that it attributed to extremely high temperatures in California.
Charles Grom, a retail analyst with JP Morgan, said Costco delivered its best quarterly gross profit margin performance in five years, "driving significant, high quality, earnings per share outperformance."
It shares rose 4.3 per cent to $66.05 before the bell Wednesday.
Costco said net income rose to $372.4 million, or 83 cents per share, in the fourth quarter ended on September 2, from $355.6 million, or 75 cents per share, a year earlier.
The 2007 results included non-cash costs of 8 cents a share related to deferred membership revenue liability.
Net sales rose to $20.09 billion from $19.5 billion. Including membership fees, total quarterly revenue was $20.5 billion.
Costco customers pay an annual membership fee to shop at the retailer's stores, which sell everything from toilet paper to diamond rings.
Investors are watching retail sales closely to see how consumer spending holds up headed into the crucial holiday selling season.
Late last month, Target Corp, the no 2 US discount retail chain behind Wal-Mart, said its September sales would fall below a previous view, while Children's Place Retail Stores Inc slashed its third-quarter earnings forecast Tuesday, saying price cuts hurt its margins.
Costco said its sales at stores open at least a year, or same-store sales, rose 5 per cent during the quarter from a year earlier.
For September, Costco said sales at its clubs open at least a year rose 6 per cent. Analysts on average were expecting a 4.7 per cent increase, according to the news agency estimates.
Costco operates 520 warehouse club stores, including 385 in the United States and Puerto Rico.