Costco Posts 12% Profit Gain but Falls Short of Estimates
Costco Wholesale Corp., the nation’s biggest warehouse retailer, reported Wednesday that its fiscal third-quarter profit rose about 12%, aided by higher sales and membership fees.
However, the results missed Wall Street’s average view by a penny a share. Costco said spiraling prices at the pump squeezed profit in its gasoline business. It said that although it was comfortable with analysts’ forecasts for the current quarter and full year, high gas prices would continue to weigh on its gross margin.
Shares of Costco, which competes with Wal-Mart Stores Inc.’s wholesale chain Sam’s Club, shed 63 cents, or 1.2%, to close at $52.93.
Costco is the second big retailer this week to say that escalating gasoline prices are hurting its performance. Over the weekend, Wal-Mart estimated that May sales in stores open at least one year would rise at the low end of its forecast because of higher gasoline and utility prices.
Gasoline prices, which have climbed 20% over the last year, reduced third-quarter earnings by about 2 cents a share, Costco said.
For the quarter ended May 7, Costco reported net income of $235.6 million, or 49 cents a share, compared with $209.8 million, or 43 cents, a year earlier. Total revenue including membership fees rose to $13.27 billion from $12 billion.
Wall Street’s average profit forecast called for 50 cents a share, according to analysts surveyed by Thomson Financial, on estimated sales of $13.17 billion.
Costco said selling prices for many food items jumped during the quarter, but it didn’t reap much benefit from higher food prices because of sharply lower consumer electronics prices.
Sales in stores open at least one year -- a closely watched performance gauge called same-store sales -- rose 7% during the quarter.
The company also said it was comfortable with analysts’ consensus estimate of 77 cents for the fourth quarter and $2.33 a share for the full year, noting that the latter estimate was at the high end of its forecast.
