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ISSAQUAH — Costco Wholesale Corp. said Thursday that its fiscal third-quarter profit fell 29 percent, partly because of a charge, as sales of bigger-ticket discretionary items continued to soften.
The Issaquah, Wash.-based warehouse club operator earned $209.6 million, or 48 cents per share, for the period ended May 10. That's down from $295.1 million, or 67 cents per share, a year earlier.
The retailer's results were partly hurt by a $34 million charge related to a lawsuit settlement involving its membership renewal policy as well as the stronger dollar. Increased employee benefits costs also weighed on its quarterly performance.
Revenue dropped 5 percent to $15.81 billion from $16.61 billion. Costco has seen its sales slip recently as consumers have limited spending during the recession and gas prices have fallen.
Analysts polled by Thomson Reuters expected profit of 53 cents per share on revenue of $16.16 billion. Analysts' estimates generally exclude one-time items.
Shares fell $1.58, or 3.2 percent, to $47.25 in premarket trading after closing at $48.83 Wednesday.
Same-store sales slipped 7 percent for the quarter, with U.S. same-store sales off 5 percent and international same-store sales down 12 percent. Excluding the impact of lower gas prices and the stronger dollar, same-store sales rose 2 percent. U.S. same-store sales were flat, excluding gas deflation. Taking out the stronger dollar's effect, international same-store sales increased 8 percent.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones.
Costco has said it remains focused on providing low-priced offerings to shoppers and that its long-term focus will pay off as the economy recovers. On Wednesday the retailer said that it was running a pilot program at two New York stores to accept food stamps as part of its response to shopper's economic woes.
Costco currently runs 555 warehouses, including 407 in the U.S. and Puerto Rico, 77 in Canada, 21 in the U.K., six in Korea, five in Taiwan, eight in Japan and 31 in Mexico.
