Costco Numbers Strong In Second Quarter
By Don Hogsett -- Home Textiles Today, 3/7/2005 12:00:00 AM
Issaquah, Wash. —
Helped by a $42.1 million tax break, and a strong 6 percent boost in same-store sales, second fiscal quarter profits at cjumped 34.7 percent, to $305.5 million from $226.8 million.
And profits would have climbed even higher but for a $16 million one-time charge stemming from the way it accounts for leases.
Costco, like most other big U.S. retailers, was hit with such a non-cash accounting charge this year in response to a recent Securities and Exchange Commission clarification.
Driving the strong gain at the bottom line was a $52.1 million tax break, covering an eight-year period, resulting from a settlement of a transfer pricing dispute between the United States and Canada.
In another boost to profits, average gross margin gained slightly, 10 basis points, or one-tenth of a percentage point, to 10.9 percent from 10.8 percent. Costs dipped slightly as well, 10 basis points, to 9.5 percent.
But pulling out the tax break, and the $16 million one-time charge, operating profits, while still strong, rose at a slower pace of 10 percent, to $393.9 million from $358.2 million last year.
Sales at the no-frills warehouse operation climbed 9.6 percent, to $12.7 billion from $11.5 billion. More importantly, same-store sales improved 7 percent, on par with last year. Domestic same-store sales rose 6 percent, while international comps rose 12 percent, ahead of a 10 percent increase reported in the same period a year ago.
Through the first six months of the year, Costco profits, helped by the tax break, climbed 28.8 percent, to $498.6 million from $387 million last year. Sales during the first half of the fiscal year grew 9.8 percent, to $24.2 billion from $22.1 billion.
Costco Wholesale Inc.
| Qtr. 2/13 (x000) | 2005 | 2004 | % change |
| a. Total company sales, including $245.5 million in membership fees, up 12.2 percent from $218.8 million during the same period a year ago. b. Second quarter results include a $4 million provision for impaired assets and closing costs, compared with $3 million last year; interest income of $24.8 million, up 89.6 percent from $13.1 million last year; and a $100.2 million provision for income taxes, down 24.7 percent from $133.2 million during the prior-year period. c. Total sales, including $483.6 million in membership fees, up 12.3 percent from $430.4 million last year. d. Six-month results include a $6.8 million provision for impaired assets and closing costs, compared with $7 million a year ago; interest income of $40.4 million, up 92.5 percent from $21 million last year; and an income tax provision of $213.7 million, down 6 percent from $227.3 million last year. |
|||
| Sales | $12,658,077a | $11,548,974a | 9.6 |
| Oper. Income (EBIT) | 393,895 | 358,176 | 10.0 |
| Net income | 305,452b | 226,792b | 34.7 |
| Per share (diluted) | 0.62 | 0.48 | 29.2 |
| Average gross margin | 10.9% | 10.8% | — |
| SG&A expenses | 9.5% | 9.6% | — |
| 12 months | |||
| 2004 | 2003 | % change | |
| Sales | 24,236,080c | 22,070,452c | 9.8 |
| Oper. Income (EBIT) | 697,340 | 616,994 | 13.0 |
| Net income | 498,605d | 386,967d | 28.8 |
| Per share (diluted) | 1.02 | 0.82 | 24.4 |
| Average gross margin | 10.8% | 10.7% | — |
| SG&A expenses | 9.8% | 9.8% | — |
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