Costco boosts sales, profits in Q3

By Staff -- Home Textiles Today, 6/2/2003 12:00:00 AM

ISSAQUAH, WA —

With sales climbing higher at a double-digit pace, and margins shooting up at an unusually rapid pace, especially for a no-frills warehouse club, third-quarter profits at Costco Wholesale Corp. raced ahead by 18.0 percent, to $153.8 million to $130.4 million last year.

Sales climbed higher by 10.8 percent, to $9.3 billion from $8.4 billion last year. Remarkably, in a persistently weak environment for most other retailers, same-store sales advanced by 6.0 percent.

Wall Street investors stood to attention and saluted, pushing Costco shares up by 1.9 percent in value, or $0.68 a share, to $36.60.

Driving profits up in addition to the stronger sales, Costco managed to widen its margins substantially, by 50 basis points, or half a percentage point, to 10.6 percent from 10.1 percent a year ago, an unusually steep climb for a low-cost, low-price retailer.

Costco earned more interest on the money it had in the bank than it paid on the money it had borrowed, putting it well ahead of the game. Interest income in the third quarter totaled $9.2 million, compared with interest expense of $8.7 million, creating a cash surplus of almost half a million dollars.

Taking a somewhat larger bite out of profits, operating costs climbed modestly higher, by 30 basis points, or three-tenths of a percentage point, to 9.9 percent of sales from 9.6 percent the preceding year

Costco Wholesale Corp.