Costco sales up 2.6% for first half

ISSAQUAH, Wash. — Costco’s profit fell short of analysts’ estimates at the mid-point in its fiscal year, but business trends were solid in the company’s second quarter with a 4% same-store sales increase at U.S. locations.

 

The company said its total revenues for the period ended Feb. 14, which included the holidays, increased 2.6% to $28.2 billion. Merchandise and service sales increased 2.6% to $27.9 billion and membership fees increased 3.6% to $603 million.

 

Total company same-store sales increased a modest 1%, however, strip out lower year over year fuel prices and the effects of the stronger U.S. dollar and the same store sale figures look quite different. On a constant currency basis excluding fuel, comps increased 4% in the U.S., 10% in Canada and 6% internationally for a total company average of 5%.

 

The sales strength translated to net income of $546 million, or $1.24 a share, down $598 million, or $1.35 a share, in the fourth quarter the prior year. However, these numbers are not as they seem as the prior year’s profit figure on an adjusted basis was $1.25 due to a non-recurring tax issue. Profits were negatively affected by expenses which grew at a faster rate than sales and contributed to the company’s earnings per share falling four cents shy of analysts’ consensus estimate of $1.28.

 

Expense pressures will persist in the back half of the company fiscal year as Costco said it would increase its starting wage to $13 to $13.50 an hour from $11.50 to $12 an hour.

 

The company ended the quarter with a worldwide network of 698 warehouses, consisting of 488 U.S. locations, 90 in Canada, 36 in Mexico, 27 in the United Kingdom, 24 in Japan, 12 in Korea, 11 in Taiwain, eight in Australia and two in Spain.