SEATTLE — Bulk retailer Costco Wholesale Corp. said Thursday its profits rose 6 percent in the fiscal third quarter, boosted by increased sales across the board and a moderate gain in business at locations open at least one year.
Quarterly income grew to $209.8 million, or 43 cents per share, in the three months ended May 8, beating Wall Street expectations by a penny a share. Earnings were $198.7 million, or 42 cents, in the same period a year ago.
Revenue, including net sales and membership fees, totaled $12 billion, a 10 percent increase from the year-ago period, when revenue was $10.9 billion. At stores open at least a year, sales increased 7 percent.
Chief financial officer Richard Galanti said the company did best in the Southeast and Midwest. He cited strong sales in electronics, automotive products, hardware, jewelry, home furnishings and fresh produce, and a weaker showing in camera film and media products.
Memberships fees, which account for about 2 percent of the company's revenue, brought in nearly $250 million, an 11 percent jump from the same period a year ago. Renewal rates remained strong, 86 percent on average, Galanti said.
Last month, shares in the wholesale club operator, which is based in Issaquah, Wash., dropped nearly 9 percent the day the company said it expected its third-quarter earnings to miss analysts' expectations, in part because of rising gasoline prices.
The company didn't take as big a hit as it had feared because gas prices have dropped slightly in recent weeks. Nevertheless, Galanti said Costco wasn't budging from its previous estimate for fourth-quarter earnings of 63 cents to 67 cents a share because of potential volatility in gas prices.
"Gasoline prices could shift any which way between now and the end of the quarter, so it's probably a good idea for them to maintain a conservative outlook," said Dan Geiman, an analyst with McAdams Wright Ragen.
Costco has 452 warehouses stores domestically and in Canada, Britain, Mexico, Taiwan, South Korea and Japan. It has opened 10 new stores so far this fiscal year and will open 10 more by the end of fiscal 2005, said Jeff Elliott, director of investor relations and finances.
The company hopes to open 25 to 30 stores next year, Galanti said.
For the first three quarters of the fiscal year, Costco's net income was $708.4 million, or $1.46 a share, up 21 percent from a year ago. The company earned $585.6 million, or $1.23 a share, in the first three quarters of fiscal 2004. Total revenue rose to $36.2 billion, up from $33 billion a year ago.
Costco shares rose 7 cents to close at $45.49 on the Nasdaq Stock Market. The company's stock has traded in a 52-week range of $36.54 to $50.46.