Quick Stats

Quick Stats

    You are here

    Food Comps Dip, but Costco Holds Own Despite Lower Gas Margins in Q3

    ISSAQUAH, WA -- Costco Wholesale Corp. continues to see strong results in the face of shrinking gasoline margins and a higher tax rate, said c.f.o. Richard Galanti during a conference call on the company's third quarter results yesterday.

    ISSAQUAH, WA -- Costco Wholesale Corp. continues to see strong results in the face of shrinking gasoline margins and a higher tax rate, said c.f.o. Richard Galanti during a conference call on the company's third quarter results yesterday.

    "We're seeing strong renewal rates, increased penetration of $100year executive memberships, and are moving forward with new market openings," said Galanti. "Gas sales are a 23 percent comp, 5 percent in gallonage."

    Food comps, however, were "down a point or two," he said, "but still in the high single digits."

    Sales for the quarter ended May 7 were up 11 percent to $13.00 billion, up from $11.75 billion during the third quarter last year. Net income for the third quarter increased to $235.6 million, or 49 cents per share, from last year's $209.8 million, or 43 cents per share.

    Costco said sales for the first 36 weeks of fiscal 2006 increased 11 percent to $39.45 billion, from $35.50 billion in 2005. Net income for the period increased to $747.6 million, or $1.55 per share, compared to $708.4 million, or $1.45 per share in 2005.

    Net income for the 36 weeks in 2005 were affected by a one-time $52.1 million income tax benefit and a cumulative pre-tax, non-cash charge of $16.0 million ($10.0 million after-tax) concerning accounting for leases. Without these adjustments, net income for the period would have been $666.3 million or $1.36 per share. Reported earnings per share of $1.55 for this period represents a 14 percent increase over this amount.

    U.S. comp sales held steady at 7 percent for the quarter and 36 weeks, while the company's international operations experienced 8 percent comps for the quarter and 9 percent comps for the 36-week period.

    For the four-week month ended May 28, Costco reported net sales of $4.71 billion, an increase of 15 percent from $4.11 billion last fiscal year. For the first thirty-nine weeks of its 2006 fiscal year ended May 28, 2006, which include the first three weeks of its fiscal fourth quarter, the company reported net sales of $43.01 billion, an increase of 12 percent from $38.54 billion over last year.

    The quarterly results fell short of missed analysts' expectations by on penny, according to Thomson First Call. Its were down 63 cents at closing, a slip of 1.18 percent.

    Costco opened 17 locations since the beginning of the fiscal year: 13 in the U.S. (including one relocation), four in Canada (one relocation), bringing its Canadian store count to 68, one in the United Kingdom (17 total), and one in Mexico (28 stores). It expects to open 12 more stores during the remainder of this fiscal year.

    The warehouse club chain operates 477 warehouses, including 350 in the United States and Puerto Rico, 68 in Canada, 17 in the United Kingdom, five in Korea, four in Taiwan, five in Japan, and 28 in Mexico. It also operates Costco Online, an electronic commerce Web site, at www.costco.com and at www.costco.ca in Canada.

    Related Content

    Related Content