Costco to pay in­vestors $3bn with div­i­dend

The Pak Banker - - Front Page -

NEW YORK

Costco Whole­sale Corp. (COST), the largest US ware­house-club chain, plans to pay a spe­cial div­i­dend of about $3 bil­lion as it re­turns in­creas­ing cash to in­vestors.

The $7-a-share pay­ment re­flects the com­pany's "strong bal­ance sheet and fa­vor­able ac­cess to the credit mar­kets," Chief Fi­nan­cial Of­fi­cer Richard Galanti said to­day as Costco re­ported a 10 per­cent in­crease in first-quar­ter sales.

The re­tailer, based in Is­saquah, Washington, held $3.47 bil­lion of net cash as of Septem­ber, the most in at least two decades, even af­ter spend­ing about $760 mil­lion to ac­quire the part­ner in its Mex­i­can joint ven­ture. Galanti said on an an­a­lyst call last month that there wasn't "a great sense of pres­sure to change our modus operandi" with re­gard to div­i­dends.

"It's a tan­gi­ble way of re­ward­ing share­hold­ers that avoids the lot­tery of a share buy­back," said Bryan Roberts, an an­a­lyst at Kan­tar Re­tail in Lon­don. "They've amassed sig­nif­i­cant cash re­serves, partly due to their success. They have been one of the most suc­cess­ful re­tail­ers in the past 20 years."

Also to­day, Costco said com­pa­ra­ble sales rose 6 per­cent in the four weeks ended Nov. 25, with growth slow­ing from 7 per­cent in the pre­vi­ous month. Ex­clud­ing the ef­fects of gaso­line prices and cur­rency move­ments, monthly growth was 5 per­cent, it said, un­changed from Oc­to­ber.

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