Costco Wholesale Corp., the largest U.S. warehouse-club chain, posted fiscal first-quarter profit that topped analysts’ estimates as its focus on low prices lured consumers.
Net income in the quarter ended Nov. 25 rose 30 percent to $416 million, or 95 cents a share, from $320 million, or 73 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Analysts projected 93 cents, the average of 22 estimates compiled by Bloomberg.
Chief Executive Officer Craig Jelinek has been keeping prices low to increase store visits while the U.S. unemployment rate stays stuck around 8 percent. Comparable-store sales in the quarter advanced 6 percent, excluding changes in gas prices and foreign-currency exchange rates.
“It was another solid quarter,” Brian Yarbrough, an analyst for Edward Jones & Co. in St. Louis, said in an interview. “They continue to drive people into their stores and are converting that traffic growth into sales.”
Costco fell 0.6 percent to $97.72 at the close in New York. The shares have added 17 percent this year.
Revenue from membership fees advanced 14 percent to $511 million, the company said. Last year’s fee increases haven’t had any impact on memberships as renewal rates were 86 percent during the quarter, Chief Financial Officer Richard Galanti said on a call with analysts. The rate was 85 percent in the same period a year earlier.
Net sales last quarter rose 9.6 percent to $23.2 billion.
Costco expects inflation to be tame in the next nine months with the exception of fresh food, beef and poultry, Galanti said.