Costco surges ahead

By Staff -- Home Textiles Today, 12/14/2006 2:33:00 PM

Issaquah, Wash. – Helped by rising same-store sales, lower borrowing costs and interest it earned on money it put in the bank, first fiscal quarter profits at Costco Wholesale Corp. climbed by 9.8%, to $236.9 million from $215.8 million last year.

But going forward, the retailer said, second quarter profits will be throttled down as the company gets hit with a $70 million pre-tax charge to cover costs tied to back-dated stock options.

Merchandise sales at the nation's dominant warehouse player advanced by 9.3%, to $13.9 billion from $12.7 billion a year ago. Same-store sales improved by 5.0%. In a further boost to the top line, membership fees jumped up by 14.0%, to $299.3 million.

Earnings in the opening quarter came in slightly ahead of Wall Street expectations, rising to $0.51 per fully diluted share, compared with a consensus forecast of a $0.50 gain.