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Costco Wholesale Corp. posted a 46 percent increase in quarterly profits, thanks to an improving economy and more consumers moving to shake off “frugality fatigue” by spending more on non-discretionary items, executives from the Issaquah, Wash.-based club store operator said during a conference call yesterday with analysts. “There’s at least not as much concern that the sky is falling,” Costco’s CFO Richard Galanti said during the call, prior to reviewing the company’s third-quarter financial results.
Net sales increased roughly 10 percent over the past three quarters as a result of both increased consumer spending and the club store segment’s growing share of the retail food market. Same-store sales, excluding the effects of gasoline inflation and currency fluctuations, also gained 4 percent in the 12-week period and 3 percent in the first 36 weeks of the year, led by gains of 8 percent and 9 percent from international outlets, according to the chain.
Among the highlights of Costco’s third-quarter financial results: net income rose to $306 million, or 68 cents a share, from $210 million, or 48 cents, a year earlier. Revenue, including membership fees, rose 12 percent, to $17.4 billion, while sales for the 568-store warehouse retailer also increased 12 percent, to $17.39 billion.
By the end of August, Costco expects to open five new stores, along with the 524 it already operates in the United States, Canada, Mexico and Puerto Rico.
During the analyst conference call, Galanti said Costco posted especially strong gains in meat, produce and other fresh foods during the third quarter, with mid- to high single-digit average increases vs. the same period a year earlier.