Earnings Preview : Costco Wholesale Corporation (NASDAQ: COST) Fourth Quarter 2010
Tuesday, September 21, 2010 2:14 PM

Costco Wholesale Corporation (NASDAQ: COST), the largest US wholesale club operator, is scheduled to release fiscal fourth quarter earnings before the opening bell on Wednesday, October 6, 2010. Analysts, on average, expect the company to report earnings of 95 cents per share on revenue of $24.26 billion. In the year-ago quarter, the company reported earnings of 85 cents per share on revenue of $22.38 billion.

Costco Wholesale Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. As of August 29, 2010 the company operated a chain of 572 warehouses, including 416 in the United States and Puerto Rico, 79 in Canada, 22 in the United Kingdom, seven in Korea, six in Taiwan, nine in Japan, one in Australia and 32 in Mexico.

In the preceding fiscal third quarter, the Issaquah, Washington-based company's net income was $306 million, or 68 cents per share, up 46% from $210 million, or 48 cents per share, in the prior-year quarter. Revenue increased 12 percent to $17.78 billion. Analysts, on average, expected the company to report earnings of 66 cents per share on revenue of $17.62 billion.

The company appears to be successful in attracting price-conscious shoppers. Costco has reported improving trend in same-store sales in each month of the fiscal-fourth quarter. The retailer posted an increase of 4% in the comparable sales for the month of June, the five weeks ended July 4, 2010. The company's comparable sales grew 6% in July, while in August same-store sales were up 7%.

Net sales for the fiscal 2010 fourth quarter were $23.6 billion, an increase of eight percent from $21.9 billion in the 16-week fourth quarter of fiscal 2009 ended August 30, 2009. The company's comparable-store sales rose 6% in the fiscal second quarter ended August 29, 2010,  with U.S. sales up 4% and international sales up 14%. According to Costco, comparable sales got a boost from inflation in gasoline prices and strengthening foreign currencies. Costco is also likely to benefit from improving consumer spending and strong international sales. The company appears well positioned to continue its growth momentum.

In terms of stock performance, Costco shares have gained nearly 3 percent since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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