Costco Q1 profit gains 17 percent
NEW YORK: Costco Wholesale Corp., the largest U.S. warehouse-club chain, posted a 17 percent increase in first-quarter profit as sales of gasoline and fresh food boosted revenue.
Net income climbed to $312 million, or 71 cents a share, in the period ended Nov. 21, from $266 million, or 60 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Analysts projected 69 cents a share, the average of 22 estimates compiled by Bloomberg.
Costco has lifted sales since the recession by luring bargain-hungry consumers to pay for membership, which allows shoppers and small businesses to buy discounted goods including groceries and televisions. The retailer increased members 3.6 percent to 58 million in the year through August.
"This has been a strong fundamental story for a long time, even pre-recession, and it's picking up right where it left off," Matt Arnold, an analyst for Edward Jones & Co. in Des Peres, Missouri, said before the results. Arnold recommends holding Costco shares.
Revenue at stores open at least a year, excluding fluctuations in gasoline prices and currency exchange rates, rose 5 percent, Costco said on Dec. 2. Sales at its 157 stores outside the U.S. advanced 10 percent, while sales at the 425 locations in the U.S. and Puerto Rico gained 3 percent.
Costco rose 45 cents yesterday to $69.64 in Nasdaq Stock Market trading. The stock has gained 18 percent this year, while competitor BJ's Wholesale Club Inc. has gained 44 percent. Wal-Mart Stores Inc., the world's largest retailer and operator of wholesaler Sam's Club, has climbed 3.1 percent in 2010. Total revenue, including membership fees, rose to $19.2 billion at Costco. Analysts predicted $18.8 billion, the average of 16 estimates. -Bloomberg