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ISSAQUAH, Wash. -- Warehouse club chain Costco Wholesale Corp. started off its fiscal 2006 strong, with September net sales of $5.14 billion for the five weeks ended October 2, an increase of 13 percent from $4.53 billion in the same period last year.
Comparable sales increased 11 percent during this period (10 percent domestically and 13 percent internationally), the company said. The U.S. figure includes the benefit from significant recent gasoline price inflation, with the average sales price per gallon of gasoline up 47 percent year-over-year in the month of September. Excluding gasoline price inflation, U.S. comparable sales in September would have been 8 percent.
The company also released fourth quarter and full-year results. Net sales for the 16-week quarter ended August 28 increased 10 percent to $16.36 billion, from $14.83 billion during the same period last year.
Comparable warehouse sales during the fiscal 2005 fourth quarter increased 7 percent. Net sales for 2005 were $51.86 billion, an increase of 10 percent over the $47.15 billion during the prior year.
Net income for the fourth quarter was up 18 percent to $354.7 million, or 73 cents per share, from $296.8 million, or 62 cents per share. Net income during the quarter was positively affected by lower income tax expense due to a tax benefit. Excluding these items, Costco estimates its "normalized" fourth quarter tax rate would have been 35.8 percent, and its net income would have been $320.2 million, or 66 cents per share.
Net income for fiscal 2005 increased 18 percent to $1.06 billion, or $2.18 per share, from $882.4 million, or $1.85 per share during the previous year. Net income during fiscal 2005 was affected by two non-recurring items previously reported concerning the second quarter: a $52.1 million income tax benefit (covering the years 1996-2003) resulting primarily from the settlement of a transfer pricing dispute between the United States and Canada; and a cumulative pre-tax, non-cash charge to pre-opening expenses of $16 million related to an adjustment of the company's method of accounting for leases (entered into over the past twenty years). Exclusive of these items and the tax benefit, net income for fiscal 2005 would have been $998.3 million, a 10 percent increase.
Costco operates 461 warehouses, including 339 in the United States and Puerto Rico, 65 in Canada, 16 in the United Kingdom, five in Korea, four in Taiwan, five in Japan and 27 in Mexico. It plans to open eleven additional new warehouses this year. Next year, Costco plans to open a total of approximately 28-30 new warehouses.