Costco’s Profit Advances 19% With Boost From Membership Fees

May 30 (Bloomberg) -- Bloomberg’s Sheila Dharmarajan reports on an increase in revenue from membership fees by Costco. She speaks on Bloomberg Television’s “In The Loop.” (Source: Bloomberg)

Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, said third-quarter profit rose 19 percent, beating analysts’ estimates, as revenue from membership fees increased.

Net income in the quarter ended May 12 rose to $459 million, or $1.04 a share, from $386 million, or 88 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Analysts projected profit of $447 million, the average of 11 estimates compiled by Bloomberg.

Costco has worked to lower its already-discounted prices to lure more shoppers to its annual memberships. Third-quarter sales at stores open for more than a year increased 7 percent, excluding changes in gas prices and foreign-currency exchange rates. Revenue by similar measures fell 1.4 percent at Wal-Mart Stores Inc. (WMT) in the U.S. and 0.6 percent at Target Corp. (TGT) in their most recent quarters.

Revenue (COST) from membership fees advanced 12 percent to $531 million, the company said. That was part of a 7.9 percent increase in total revenue to $24.1 billion, Costco said. That compared with the $24.2 billion average estimate of 17 analysts.

Costco rose 1.3 percent to $114.43 at 10:53 a.m. in New York. The shares added 14 percent this year through yesterday, compared with a gain of 16 percent for the Standard & Poor’s 500 Index.

Annual membership fees at Wal-Mart’s Sam’s Club chain increased by as much as $10 earlier this month, the first such increase since 2006, the company said May 16.

To contact the reporter on this story: Renee Dudley in New York at rdudley6@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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