Costco has same-store success
May 31, 2004,
Helped by surging same-store sales, which climbed at a double-digit pace, Costco Warehouse Corp. drove third-quarter profits up almost a third, 29.2 percent, to $198.7 million from $153.8 million last year.
Overall sales would have climbed modestly higher, 16 percent in the third quarter and 15 percent for the nine months, but for a change in the way the retailer accounts for vendor allowances. The new accounting change reduces net sales and merchandise costs by an equal amount, but has no impact on margins or the bottom line.
Fueling the big earnings increase, in addition to the stronger same-store sales, Costco pushed interest and miscellaneous income up 54.6 percent, to $14.2 million from $9.2 million, dropping $5.1 million in extra cash straight to the bottom line.
Putting earnings under some pressure, average gross margin narrowed 120 basis points, or 1.2 percentage points, to 10.6 percent from 11.8 percent a year ago. Acting as a partial offset, operating costs were narrowed slightly, to 9.8 percent of sales from 9.9 percent a year ago.
Costco Wholesale Corp.
|Qtr. 5/9 (x000)||2004||2003||% chg|
|a-Retail sales, excluding $224.5 million in membership fees, up 13.3 percent from $9.5 million during the prior-year third quarter. For the 36 weeks, membership fees increased 12.9 percent, to $654.9 million from $580 million.
|Oper. income (EBIT)||306,199||261,439||17.1|
|Per share (diluted)||0.42||0.33||27.3|
|Average gross margin||10.6%||11.8%||—|
|36 weeks||2004||2003||% chg|
|Oper. income (EBIT)||937,534||829,053||13.1|
|Per share (diluted)||1.23||1.02||20.6|
|Average gross margin||10.7%||10.7%||—|