Costco earnings up almost 20 percent in fourth quarter

SEATTLE — Costco Wholesale Corp. said higher sales of discount items combined with a favorable tax rate helped push its profit up nearly 20 percent in its fourth quarter. Its shares rose more than 5 percent.

The wholesale club operator said it earned $354.7 million, or 73 cents per share, in the quarter ended Aug. 28, up from $296.8 million, or 62 cents per share, a year ago.

Revenue, including sales and membership fees, rose to $16.7 billion from $15.14 billion a year earlier.

A tax benefit and a lower tax rate boosted earnings for the latest quarter by 7 cents a share. Excluding those items, net income would have been $320.2 million, or 66 cents per share. That is 2 cents a share above the consensus forecast of analysts surveyed by Thomson Financial.

Costco Chief Financial Officer Richard Galanti said the company was hurt by higher gas prices, which reduced the company’s profit margin on its own gasoline sales and also increased shipping costs.

Costco operates 461 warehouses, including 339 in the U.S. and Puerto Rico. The company said it expects to open 28 to 30 new stores in the U.S. in its current fiscal year, plus two or three new stores in Mexico. Galanti also said the company may expand into a new country in its 2007 fiscal year. In addition to the United States, Costco operates in Canada, the United Kingdom, Taiwan, Korea, Japan and Mexico.

For the full fiscal year ended Aug. 28, net income rose to $1.06 billion, or $2.18 per share, from $882.4 million, or $1.85 per share, in the previous fiscal year. Revenue including membership fees and sales rose to $52.94 billion from $48.11 billion.