Costco Profit Tops Estimates as Low Prices Drive Traffic

Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, posted fiscal fourth-quarter profit that topped analysts’ estimates as low prices drove sales.

Net income in the quarter ended Aug. 31 rose 27 percent to $609 million, or $1.39 a share, from $478 million, or $1.08, a year earlier, the Issaquah, Washington-based company said today in a statement. Analysts projected $1.31, the average of 25 estimates compiled by Bloomberg.

Chief Executive Officer Craig Jelinek has been keeping prices low and adding more service areas, such as vision centers, to increase store visits. The retailer also has been selling more private-label goods to improve profit margins.

Costco rose 3.3 percent to $102.92 at 9:43 a.m. in New York and earlier climbed as much as 3.9 percent for the biggest intraday gain since Aug. 11, 2011. The shares added 20 percent this year through yesterday.

Revenue from membership fees advanced 18 percent to $694 million, the company said.

Same-store sales, a key metric for retailers because only established locations are counted, rose 6 percent, excluding changes in gas prices and currency rates, the company reported on Oct. 4. Net sales gained 14 percent to $31.5 billion.

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