Rising Sales Boost Costco Profits
December 13, 2004-- Home Textiles Today,
Issaquah, Wash. — Helped by a double-digit gain in sales, first fiscal quarter profits at Costco Wholesale Corp. shot up 20.6 percent, to $193.2 million from $160.2 million a year ago.
Sales climbed 10 percent, to $11.3 billion from $10.3 billion last year, and same-store sales advanced 7 percent. Sales would have risen even higher, but were capped by a change in the way the retailer accounts for vendor coupons and rebates. Excluding the accounting change, overall sales would have climbed 11 percent, and same-store sales 8 percent. The change had no impact on gross profit or net income.
Wall Street took a dim view of the lower sales volumes engendered by the accounting change and pushed Costco stock down 2 percent, or $1 a share, to $47.90 in the hours after the news came out on Dec. 9.
Margins and costs both held steady during the opening quarter, margins unchanged at 8.9 percent, and costs unchanged at 10 percent of sales.
In a lift to the bottom line, the retailer added $15.6 million in interest and miscellaneous income, almost double the $7.9 million recorded the prior year. The interest income more than offset interest expense, which climbed 13.8 percent, to $9.6 million from $8.5 million.
Costco Wholesale Corp.
|Qtr. 11/21 (x000)||2004||2003||% change|
|a-Net sales, excluding membership fees of $238.1 million, up 12.5 percent from $211.7 million during the same period a year ago.
b-First fiscal quarter results include a $2.8 million provision for impaired assets and closing costs, compared with a $4 million provision last year; and interest and miscellaneous income of $15.6 million, up 97.3 percent from $7.9 million a year ago.
|Oper. Income (EBIT)||297,845||250,818||18.7|
|Per share (diluted)||0.40||0.34||17.6|
|Average gross margin||8.9%||8.9%||—|
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