Tags: Costco | profit | earnings | retail

Costco's Profit Tops Estimates as Same-Store Sales Increase

Wednesday, 08 October 2014 09:30 AM

Costco Wholesale Corp., the largest U.S. warehouse-club chain, posted fourth-quarter profit that topped analysts’ estimates after sales at its established stores increased.

Net income rose 13 percent to $697 million, or $1.58 a share, from $617 million, or $1.40, a year earlier, the Issaquah, Washington-based company said Wednesday. Analysts had projected $1.52 for the quarter, which ended Aug. 31, according to data compiled by Bloomberg.

Sales at Costco stores open more than a year increased 7 percent in the quarter, excluding changes in gasoline prices and foreign-currency exchange rates. The performance outshined that of Wal-Mart Stores Inc. and Target Corp., which saw little change in sales in their most recent quarters. Costco’s results also mark the first time in five quarters that earnings have topped analysts’ estimates.

“The $0.06 beat will begin the upward earnings revision cycle, always critical for retail stocks,” Chuck Grom, an analyst at Sterne Agee & Leach Inc., said today in a report. It “breaks an unfavorable string of four consecutive misses.”

Costco rose as much as 3 percent to $128.99 in early trading after the results were released. The shares had gained 12 percent in past 12 months before today, compared with a 17 percent advance for the Standard & Poor’s 500 Index.

Sales Growth

Costco’s total fourth-quarter sales rose 9.3 percent to $35.5 billion. Analysts estimated $35.6 billion on average. Revenue from membership fees advanced 7.3 percent to $768 million.

The company’s growth contrasts with sluggish sales at other large discount chains.

Wal-Mart, the world’s largest retailer, reported stagnant same-store sales in August and cut its earnings forecast for the year, hurt by higher health-care costs and slow traffic at its supercenters. The Bentonville, Arkansas-based retailer hasn’t posted a same-store sales gain for six quarters, and customers are making fewer trips to big-box retailers. Cuts in government assistance also are leaving low-income shoppers with less money to spend.

Target, meanwhile, is still recovering from a hacker attack during last year’s holiday season and a fumbled expansion into Canada. The Minneapolis-based company, which recently hired a chief executive officer, posted quarterly profit in August that missed analysts’ estimates.

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Costco posted fourth-quarter profit that topped analysts' estimates after sales at its established stores increased.
Costco, profit, earnings, retail
Wednesday, 08 October 2014 09:30 AM
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