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Costco Q4 Beats Street With Housewares Boost

Wednesday October 10th, 2012 - 1:52PM


For its fiscal fourth quarter, Costco posted net sales that beat Wall Street estimates and included a notable housewares performance. Net income for the 17-week 2012 fourth quarter was $609 million, or $1.39 per diluted share, versus $478 million, or $1.08 per diluted share, during the 16-week fourth quarter of fiscal 2011.

A Zacks Consensus Estimate of Wall Street analysts called for $1.30 in fourth quarter earnings per diluted share.

The 2012 fourth quarter included an $11.5 million pretax LIFO charge, or two cents per diluted share, compared to a $32 million pretax LIFO charge, or four cents per diluted share, in the fiscal 2011 fourth quarter. Net income for the 53-week fiscal 2012 was $1.71 billion, or $3.89 per diluted share, versus $1.46 billion, or $3.30 per diluted share, during the 52-week fiscal 2011. For fiscal 2012 in total, the LIFO charge was $20.5 million pretax, or three cents per diluted share, compared to $87 million pretax, or 12 cents per diluted share, last year.

Operating income was $949 million in the 2012 fourth quarter versus $762 million in the year-prior period. For the full year, operating income was $2.76 billion versus $2.44 billion in the year earlier.

In the fourth quarter, comparable store sales in the United States advanced by 6% while those in international markets advanced by 7% for a combined 6%. In the full fiscal year, U.S. comps increased by 6% and those in international markets increased 8% for a combined 6%. Net sales for the fourth quarter were $31.52 billion, up 14% from the year-earlier period, while those for fiscal 2012 were $97.06 billion, up 12% from fiscal 2011.

In a conference call, Costco CFO Richard Galanti said average frequency of traffic improved in the quarter and average transaction was flat, although that metric would have been up slightly discounting currency exchange rate impact. Costco’s Internet business saw a 14% sales gain in the fourth quarter. The company will complement its e-commerce operations in the U.S. and Canada on October 15 by launching an online sales site in the United Kingdom.

In terms of category comp sales performance in the quarter, Galanti said Softlines, including all home goods, was up in the high single digits with the strongest numbers in small electrics and domestics. Food & Sundries, Hardlines and Electronics all posted mid single digit gains. Lawn & Garden was a standout within Hardlines.