Costco Results Rise on Higher Gas Prices
Costco Wholesale Corp., the largest U.S. membership-club retailer, said Thursday that fiscal first-quarter profit rose 21%. The shares fell after Costco failed to beat analysts’ expectations.
Net income increased to $193.2 million, or 40 cents a share, from $160.2 million, or 34 cents, a year earlier. Revenue in the three months ended Nov. 21 rose 10% to $11.58 billion, the smallest increase in seven quarters, the Issaquah, Wash.-based company said. Sales at stores open at least a year, a key measure of retail health, rose 7%.
Chief Executive James Sinegal lowered expenses partly by increasing employee contributions to healthcare premiums. Gasoline prices that were about 33% higher than a year earlier also helped Costco, whose comparable sales have outpaced those of Wal-Mart Stores Inc.’s Sam’s Club for more than a year.
The retailer, which offers a wide variety of items, including groceries, office supplies, barbecue grills and clothes, beat analysts’ estimates the last six quarters.
“Although the reported result was in line with consensus, we believe investors have come to expect” the company to beat analysts’ estimates, J.P. Morgan Securities Inc. analyst Shari Schwartzman Eberts wrote.
Shares of Costco fell 80 cents to $48.10 on Nasdaq. They have risen 29% this year.
Costco is “comfortable” with analysts’ estimates of 54 cents a share in the current quarter and $2.11 for the year, Chief Financial Officer Richard Galanti said during a conference call.
The company was expected to have net income of 40 cents a share in the first quarter, the average estimate of 25 analysts surveyed by Thomson First Call. Analysts had expected revenue of $11.57 billion.
Costco faced difficult comparisons after luring new shoppers a year ago while workers at supermarkets in Southern and Central California were locked out and on strike. Gains in membership will probably slow as Costco adds locations in areas where it already has clubs, analyst Emme Kozloff at Sanford C. Bernstein wrote.
