(Adds details from conf call, background)
Sept 29 Warehouse club retailer Costco Wholesale
Corp reported a higher-than-expected quarterly profit
as it benefited from paying lower fees to credit card partner
Visa Inc and shoppers spent more on appliances,
electronics and hardware.
The lower payments helped offset falling prices of grocery
and fresh food in the quarter, Chief Financial Officer Richard
Galanti said on a post-earnings call.
Margins at grocery retailers have taken a hit due to lower
prices and companies such as Wal-Mart Stores Inc and
Dollar General Corp further cutting prices to win market
Costco completed the switch to Visa from American Express Co
during the fourth quarter.
The retailer is also likely to have benefited from higher
fees from new credit card sign-ups, Deutsche Bank analyst Paul
Trussell wrote in a pre-earnings note.
Consumer spending in the United states rose 4.3 percent in
the fourth quarter, according to data released by the Commerce
Department on Thursday.
The bump in spending is likely to have helped Costco, which
mainly caters to high-income customers.
Net income rose to $779 million, or $1.77 per share, in the
fourth quarter ended Aug. 28, from $767 million, or $1.73 per
share, a year earlier.
Analysts on average had expected earnings of $1.73 per
share, according to Thomson Reuters I/B/E/S.
The retailer reported a 2 percent rise in quarterly sales to
For the fourth quarter, it also reported a 1 percent drop in
sales at U.S. stores open more than a year. Excluding the impact
of fuel and currency fluctuations, sales at U.S. comparable
stores rose 2 percent.
Shares of the company rose 2.1 percent after the bell. Up to
Thursday's close, the stock had fallen 8.7 percent compared to a
15.4 percent rise in Wal-Mart's shares.
(Reporting by Sruthi Ramakrishnan and Abhijith Ganapavaram in
Bengaluru; Editing by Shounak Dasgupta)