Issaquah, Wash. - Facing sharp pricing pressure from rival Sam's Club, Costco Wholesale reported a 3 percent drop in net income for its fiscal fourth quarter.
The warehouse club earned $239.4 million, down from the $247.4 million recorded in the year-ago period.
The fourth quarter profit decline was a result of Costco's response to Sam's lowered prices, which, according to industry analysts, fired up somewhat of a price war between Costco and the Wal-Mart wholesale club division.
However, Costco sales, swung to the upside in the fourth quarter, ended Aug. 31, climbing 11 percent, to $13.4 billion, up from $12.1 billion in the same three months in 2002. Comparable warehouse sales increased 7 percent.
Costco currently operates 420 warehouses, including 310 in the United States. An additional 10 warehouses will be opened in 2003, including the relocation of one existing unit to a larger and better-located facility.
For the 12 months, Costco net income remained on the plus side of the ledger, climbing 3 percent, to $721 million, up from $700 million in the previous fiscal year.
Net sales for the 12 months jumped 10 percent, hitting $41.7 billion, compared with $38 billion in the same period a year ago. Comp-store sales for the 12 months increased 5 percent.
Costco reported that one of its subsidiaries acquired from Carrefour Nederland B.V. its 20 percent equity interest in Costco Wholesale UK, bringing Costco's ownership in Costco Wholesale UK to 100 percent. The UK operation currently includes 15 Costco warehouses in England and Scotland, with two additional locations to be opened prior to the end of the calendar 2004.