Costco 4th-quarter earnings up on higher gas prices, strength overseas; revenue climbs

Costco 4Q net income rises on strength overseas

PORTLAND, Ore. — Costco Wholesale Corp.’s fourth-quarter net income rose nearly 16 percent on increased revenue from membership fees and international operations.

Shoppers, who began to flock to the warehouse club operator when the recession hit for deals on everyday items, continued to drive strong sales of food and necessities. Company leaders said purchases of small extras, like housewares and sporting goods, continued to grow modestly.

The nation’s largest warehouse club operator reported Wednesday that it earned $432 million, or 97 cents per share, for the period that ended Aug. 29. That’s up from $374 million, or 85 cents per share, in the same quarter last year. Revenue rose 8 percent to $24.13 billion.

The results beat analysts expecations of 95 cents per share, according to Thomson Reuters. But Costco fell short of revenue expectations of $24.23 billion, sending shares down in trading.

Costco also saw its push to open clubs overseas pay off. While revenue from sales at clubs open at least a year climbed 6 percent overall, that same figure jumped 14 percent for international sales. Excluding the impact of gasoline and foreign exchange, the figure rose 4 overall and 10 percent internationally.

This is considered a key measurement of a retailer’s health because it measures results at existing stores rather than newly opened ones.

Costco also reported Wednesday that the revenue at stores open at least a year rose 5 percent for the month of September. Analysts had expected a 4.5 percent increase.

The company does not issue earnings guidance for future quarters. But Richard Galanti, Costco’s chief financial officer, said management is “positive and aggressive” as it heads into the key holiday season.

“We feel good about selling through without risk of big markdowns, and we’ve had good sell-through on some seasonal stuff,” Galanti said.

Costco has been one of the top performers during the recession, so the more modest quarter left investors a little leery. Shares of the company, based in Issaquah, Wash., fell 71 cents to $63.95 in early afternoon trading.

For the full year, Costco’s net income increased 19 percent to $1.3 billion, or $2.92 per share, compared with $1.09 billion, or $2.47 per share, a year earlier. Annual revenue rose 9.1 percent to $77.95 billion.