Costco Wholesale 2nd-quarter profit climbs; revenue rises on higher gas prices, softer dollar

Costco 2Q profit rises; international sales strong

PORTLAND, Ore. — Strong overseas sales growth and increased gasoline prices boosted Costco Wholesale Corp.’s revenue in the second quarter, helping send the warehouse club operator’s profit up 25 percent.

Costco reported Wednesday that it earned $299 million, or 67 cents per share, for the quarter. That’s up from a profit of $239 million, or 55 cents per share, a year earlier.

Even excluding a one-time charge of 3 cents per share tied to employee benefits, Costco’s profit fell short of analyst expectations of 72 cents per share.

Costco, based in Issaquah, Wash., has weathered the down economy better than many retailers as its shoppers come in for deals on everyday items. The company’s membership revenue grew nearly 9 percent, with fees unchanged. Its total quarterly revenue grew 11 percent to $18.74 billion.

The revenue beat the average expectation for $18.56 billion from analysts surveyed by Thomson Reuters.

Chief Financial Officer Richard Galanti said food sales were steady and the company saw modest growth in discretionary categories like sporting goods and some housewares. Much of the revenue gain came from higher gas prices and the weaker dollar’s effect on overseas sales.

But the company reported a strong showing on a key measure of retailers’ performance. It sales at stores that have been open at least a year grew 9 percent — or 3 percent, excluding the impact of gasoline sales and foreign exchange. For the U.S. overall, the figure rose 5 percent, and it rose 26 percent at international stores.

This figure is a key indicator because it measures results at existing stores rather than those that open or close during the year.

Costco leaders said the company’s margins grew on many items including food, where the company cut prices last year on items like cheese and eggs as commodity prices fell. But they said those pressures are abating.

Shares of Costco, which is the largest of the wholesale club operators, fell 70 cents to close at $60.68 on Wednesday.

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AP Retail writer Michelle Chapman contributed to this report from New York.