Costco Profit Increases Nearly 12%

Costco Wholesale Corp. said Thursday that fiscal first-quarter profit grew nearly 12%, helped by growth at its warehouse clubs open at least one year.

For the period ended Nov. 20, the nation’s largest wholesale club operator reported net income of $215.8 million, or 45 cents a share, up from $193.2 million, or 40 cents, a year earlier.

The latest quarter included a charge of about 1 cent a share from damage caused by Hurricane Wilma in Florida; the previous year’s results included a 1-cent-a-share charge from four hurricanes in the state.

Costco, based in Issaquah, Wash., said net sales for the quarter rose 12% to $12.7 billion, with sales up 9% at warehouses open at least one year.

Total revenue, which includes membership fees, increased to $12.9 billion from $11.6 billion in the year-earlier period.

In a conference call with analysts, Costco Chief Financial Officer Richard Galanti said the retailer was particularly pleased with consumer electronics sales.

Costco met analysts’ average profit estimate of 45 cents a share and exceeded expectations for $12.8 billion in revenue, according to a Thomson Financial poll.

The company had not provided specific guidance but said in October that analysts’ estimates were at the high end of what it expected to earn.

During the conference call, Galanti would not specify whether the company might increase its $45 annual membership fee in response to competitors’ moves. Sam’s Club, a unit of Wal-Mart Stores Inc., will raise its fees by $5 to $40 for consumers and $35 for businesses, effective Jan. 1. BJ’s Wholesale Club Inc. also plans to raise its membership fee to $45 early next year.

Galanti did say, however, that the company has traditionally raised its membership fees in $5 increments and “logic would say” the annual fee would reach $50 at some point.

Costco shares fell $1.06, or 2.1%, to $48.29.