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Costco Posts Higher Q2 Net Sales, Income

3/05/2008 02:49:00 PM Eastern

Issaquah, Wash. — Costco reported higher net sales for its fiscal second quarter and slightly higher net income.

Net sales for the second quarter of fiscal 2008, ended Feb. 17, increased 12 percent to $16.62 billion, from $14.80 billion during the second quarter of fiscal 2007. 

Prior-year second-quarter sales results were negatively impacted by an increase in sales returns reserve of $224.4 million. Excluding the sales returns reserve increase, net sales for the second quarter of fiscal 2007 were $15.03 billion.

Comp-store sales for the quarter were up 5 percent in the United States, 17 percent higher for international and 7 percent for the entire company. The U.S. comparable sales figure includes, among other things, the effect of recent gasoline price inflation, with the average sales price per gallon of gasoline up 29 percent year-over-year for the quarter. Excluding this, U.S. comparable sales in the second quarter would have been 3 percent. In addition, significantly stronger foreign exchange rates, primarily in Canada, positively impacted the second quarter's international comparable sales results. On a local currency basis, international comparable sales increased 6 percent in the second quarter.

Net income for the second quarter of fiscal 2008 was $327.9 million, compared with $249.5 million during the second quarter of fiscal 2007. As previously reported, included in last year's second-quarter results were three non-recurring items. Excluding these items, which combined to an $84.4 million pretax charge ($53.4 million after-tax), second-quarter fiscal 2007 net income would have been $302.9 million, or $0.66 per diluted share.

Costco currently operates 534 warehouses, including 391 in the United States and Puerto Rico. The Company plans to open an additional 16 to 18 new warehouses (including the relocation of four to five warehouses to larger and better-located facilities) prior to the end of its 2008 fiscal year on Aug. 31, 2008.

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