March 5 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. chain of warehouse clubs, posted a 31 percent increase in second-quarter profit while reporting sales that rose less than some analysts estimated.

The retailer declined 2.5 percent in Nasdaq trading.

Revenue advanced 12 percent to $16.6 billion in the three months through Feb. 17, Costco said today in a statement. That trailed the $17 billion average estimate of analysts.

The retailer, which has 534 stores in the U.S. and overseas, said it was ``comfortable'' with analysts' estimates for a 15 percent increase in full-year earnings, contrasting with BJ Wholesale Club Inc.'s forecast for earnings that beat analysts' projections.

Costco's ``earnings were pretty good, but it's a premium retail stock and pretty good isn't good enough,'' said David Abella, who helps manage $2.5 billion at Rochdale Investment Management LLC.

Costco fell $1.56 to $60.83 at 4 p.m. in Nasdaq Stock Market composite trading, the lowest price since September. The shares are down 13 percent this year after posting five straight annual increases.

Net income climbed to $327.9 million, or 74 cents a share, matching the Issaquah, Washington-based company's previous outlook. A year earlier, Costco's profit fell to $249.5 million, or 54 cents a share, after the chain set aside money for a new returns policy and reimbursed workers for tax losses on stock options.

Analysts in a Bloomberg survey predicted profit of 74 cents a share, on average.

Bulk Sales

Costco's Chief Financial Officer Richard Galanti said in a conference call with analysts that he was ``OK'' with analysts' profit estimates of 65 cents a share in the current quarter and ``comfortable'' with the full-year projection of $2.99. He called both ``at the high end of a small range.''

The warehouse club said sales at stores open more than a year in February increased 7 percent for the third straight month.

Comparable-store sales at U.S. locations rose 5 percent, while international stores climbed 18 percent. The U.S. advance was 3 percent after taking out the impact of higher gasoline prices. The international gain was 6 percent, excluding currency fluctuations.

Galanti said Costco is now able to buy more ``previously unavailable'' national clothing brands as sales elsewhere slow. Last week, Sears Holdings Corp. Chairman Edward Lampert said the retailer would consider selling brands such as Craftsman tools through other merchants.

``Our phone is always open, and we'll see, but I don't know,'' Galanti said in response to a query about Sears. He said he wasn't aware of any discussions. ``We have some good brands ourselves.''

BJ's Earnings

BJ's said fourth-quarter net income increased more than fourfold to $50.2 million, or 80 cents a share, helped by higher January sales and more-profitable merchandise. A year earlier, earnings included closing costs for its restaurant-supply unit. The chain has 177 locations.

Sixteen analysts surveyed by Bloomberg predicted profit of 74 cents a share for the 13-week period ended Feb. 2. BJ's advanced $2.24, or 6.7 percent, to $35.52 in New York Stock Exchange composite trading, the most since August.

BJ's, based in Natick, Massachusetts, is the third-largest U.S. warehouse chain by sales after the Sam's Club division of Wal-Mart Stores Inc.

The company forecast earnings per share in the year through January 2009 of $1.98 to $2.08, Chief Financial Officer Frank Forward said today in a conference call with analysts. The average estimate of 14 analysts in a Bloomberg survey was for $1.91.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Last Updated: March 5, 2008 16:56 EST