Earnings rose for both the fourth quarter and the full 2010 fiscal year for Costco Wholesale (NASDAQ: COST) as the company’s warehouse stores continue to attract more traffic. For the quarter, Costco reported EPS of 97 cents a share, better than average estimates of 95 cents a share, and for the fiscal year, EPS totaled $2.92, a penny better than expected.
Revenues, however, were off a bit. For the fourth quarter Costco reported sales of $23.59 billion, compared with estimates of $24.22 billion, and for the full year sales totaled $76.25 billion, lower than analysts’ expectations of $77.92 billion. Costco also reported same-store sales, excluding gasoline and currency effects, rose 2% in U.S. stores and 10% internationally in September. Target (NYSE: TGT) has not yet released September same-store sales, and Wal-Mart Stores (NYSE: WMT) no longer releases monthly sales reports.
It’s interesting to note that Costco’s earnings, both for the quarter and for the full year, are entirely comprised of membership fees. Quarterly earnings were $432 million, and membership fee revenue totaled $533 million. Annual earnings were $1.3 billion, and membership fee revenue totaled nearly $1.7 billion. Costco’s customers are apparently willing to pony up the company’s profits in exchange for the lower prices.
Costco did not provide any guidance for the 2011 fiscal year, but analysts’ estimates for the quarter ending in November 2010 are for earnings per share of 67 cents a share on revenue of $18.47 billion. For the 2011 fiscal year, analysts estimate earnings at $3.24 per share on revenue of $83.10 billion. Those numbers are probably achievable because the store continues to attract more traffic, all of which pays for the privilege of strolling the store’s aisles.
Investors have shaved about 2.5% off Costco’s share price in pre-open trading this morning, but that may have more to do with the ADP report that the private sector lost more jobs in September than with Costco’s earnings.
Still, Costco is not immune to a downturn in the economy. In the fourth quarter a year ago, Costco’s U.S. same-store sales were off 6%. No one wants to see those days again.
As of this writing, Paul Ausick did not own a position in any of the stocks named here.
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