Costco Quarterly Profit Surges 39% on Tax Benefit
Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, said second-quarter profit rose 39 percent, helped by a tax benefit on a dividend paid to an employee retirement-savings program.
Net income in the quarter ended Feb. 17 rose to $547 million, or $1.24 a share, from $394 million, or 90 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Excluding a gain of $62 million from a tax benefit in connection with a dividend paid to a 401(k) savings plan, profit was $1.10 a share. Analysts projected $1.06, the average of 24 estimates compiled by Bloomberg.
Costco has worked to lower its already-discounted prices to lure more shoppers to its annual memberships. The strategy has worked, helping boost second-quarter sales at stores open for more than a year 5 percent, excluding changes in gas prices and foreign-currency exchange rates. Revenue by similar measures gained 1.2 percent at Wal-Mart Stores Inc. in the U.S. and 0.4 percent at Target Corp. (TGT) in their most recent quarters.
Costco rose 1.3 percent to $103.75 at the close in New York. The shares have added 5.1 percent this year, compared with an 8.9 percent gain for the Standard & Poor’s 500 Index.
Revenue from membership fees advanced 15 percent to $528 million, the company said. That was part of an 8.3 percent increase in total revenue to $24.9 billion, Costco said. That missed the $24.95 billion average estimate of 17 analysts.
About half of the gain in membership revenue came from fee increases, Chief Financial Officer Richard Galanti said on a call with analysts.
To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net
March 12 (Bloomberg) -- David Strasser, an analyst at Janney Montgomery Scott LLC, talks about Costco Wholesale Corp.'s second-quarter earnings and outlook. Strasser speaks with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg Television's "Surveillance." Julia Coronado, chief North America economist for BNP Paribas SA in New York, also speaks. (Source: Bloomberg)
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.