Thursday, May 28, 2009

Costco Earning Slips 29% On Lower Revenue, Staff Costs

. Thursday, May 28, 2009

By stockOzone team

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.

Disclosure: Author does not own any of the stocks discussed here.





Bookmark and Share

0 comments:

Post a Comment

 
Visit blogadda.com to discover Indian blogs