DOW JONES NEWSWIRES
Costco Wholesale Corp.'s (COST) fiscal third-quarter earnings
per share fell 28%, mainly due to lower revenue, a $34 million
litigation settlement and higher staff benefit costs.
While warehouse and discount retailers like Costco - known for
selling big packages of household goods - have held up better than
other retailers, the company has been hit still by the weakened
economy. Slumping gas prices have cut into revenue, as has the
stronger dollar.
Same-store sales fell 5% in the U.S. in the third quarter and
12% internationally. But excluding gas and currency changes, sales
were flat in the U.S. and up 8% internationally.
Aside from the $34 million pretax charge related to a litigation
settlement concerning its membership renewal policy, Costco said
employee benefits costs rose, mainly due to higher health care
usage.
It booked lower international profit due to the significant
strengthening of the U.S. dollar against the currencies of Canada,
the U.K., South Korea and Mexico, and said it experienced overall
"ongoing weakness in sales, particularly sales of higher-ticket,
discretionary items."
For the period ended May 10, 2009, Costco posted income of
$209.6 million, or 48 cents a share, down from $295.1 million, or
67 cents a share, a year earlier. Revenue decreased 5% to $15.48
billion as overall same-store sales fell 7%, though were up 2% on
an adjusted basis.
Analysts surveyed by Thomson Reuters expected earnings of 53
cents and revenue of $16.17 billion.
Last month, Costco said it would close its two Costco Home
stores this summer. The operation, which sold home furnishings to
members, is being shuttered as furniture sales in general have been
weak.
The company has 555 locations overall, 407 in the U.S. and
Puerto Rico. It plans to open six more by Aug. 30.
Costco's shares closed Wednesday at $48.83.
-By Kerry E. Grace and Steve McGrath, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com