Costco Announces Third Quarter Earnings

May 26th, 2011 · No Comments

On Wednesday, May 25, Costco announced their operating results for the third quarter and first thirty-six weeks of fiscal 2011, both ended May 8, 2011.  They had also previously announced a higher dividend for shareholders.  Owners of shares as of market close May 11, 2011 will be eligible for a dividend of 24 cents per share; up from 21 cents per share.

Net sales for the quarter increased 16 percent, to $20.19 billion, from $17.39 billion during the third quarter of fiscal 2010. Net sales for the first thirty-six weeks of fiscal year 2011 increased 13 percent, to $59.46 billion, from $52.66 billion last year. This year’s results include sales from Costco’s 50% owned Mexico joint venture, as they began consolidating its Mexico operations beginning with its 2011 fiscal year. Mexico sales accounted for approximately three percentage points of the increase for the quarter and the year-to-date sales.

Comparable sales for the third quarter and first thirty-six weeks of fiscal 2011, including Mexico operations for this year and last year, were as follows:

                            12 Weeks      36 Weeks
                            ---------     ---------
     U.S.                      10%            6%
     International             18%           15%
     Total                     12%            9%
                            =========     =========

Inflation in gasoline prices and strengthening foreign currencies had a positive impact on comparable sales. Excluding these effects, comparable sales were as follows:

                            12 Weeks      36 Weeks
                            ---------     ---------
     U.S.                       6%            4%
     International             11%           10%
     Total                      7%            6%
                            =========     =========

Net income for the quarter was $324 million, or $.73 per diluted share, compared to $306 million, or $.68 per diluted share, last year. Net income for the first thirty-six weeks was $984 million, or $2.22 per diluted share, compared to $871 million, or $1.95 per diluted share, last year. The consolidation of the Mexico joint venture had no impact on net income or earnings per share attributable to Costco. The quarter this year included a $49 million pre-tax LIFO charge ($.07 per diluted share). There was no LIFO charge in any quarter of fiscal 2010. The prior year’s third-quarter results were positively affected by a $14 million pretax benefit ($.02 per diluted share) related to a partial reversal of a Canadian tax liability.

Costco currently operates 581 warehouses, including 425 in the United States and Puerto Rico, 80 in Canada, 32 in Mexico, 22 in the United Kingdom, seven in Korea, six in Taiwan, eight in Japan, and one in Australia. Costco also operates Costco Online, at www.costco.com and at www.costco.ca in Canada. Costco plans to open up to eleven additional warehouses prior to the end of its 2011 fiscal year on August 28, 2011.

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