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Costco beats expectations

A shopper talks on the phone at the Costco store in Colchester, Vt.. Costco Wholesale Corp., the nation's largest wholesale-club operator, said Thursday that its second-quarter profit slipped 3 percent from a year ago when its results included a hefty one-time gain. (Associated Press / The Spokesman-Review)
Associated Press The Spokesman-Review
A shopper talks on the phone at the Costco store in Colchester, Vt.. Costco Wholesale Corp., the nation's largest wholesale-club operator, said Thursday that its second-quarter profit slipped 3 percent from a year ago when its results included a hefty one-time gain. (Associated Press / The Spokesman-Review)

Costco Wholesale Corp., the nation’s largest wholesale-club operator, said Thursday that its fiscal second-quarter profit slipped 3 percent, but the results still beat Wall Street expectations, nudging its shares to its highest level in five years.

Costco shares rose 61 cents, or 1.2 percent, to close at $52.80 Thursday on the Nasdaq Stock Market after rising earlier in the day to $53.30, its highest level in the past five years.

For the three months ended Feb. 12, Issaquah-based Costco said net income declined to $296.2 million, or 62 cents per share, from $305.5 million, or 62 cents per share, a year ago. Last year’s results included a one-time income tax gain of $52.1 million. Excluding the gain, the company would have earned $263.4 million, or 54 cents per share, in the year-earlier period.

Total revenue, including sales and membership fees, rose 11 percent to $14.05 billion from $12.66 billion in the same period last year. Same-store sales, or sales at stores open at least one year, rose 7 percent companywide during the 12-week period, and grew 8 percent in February. Year-to-date, same-store-sales are up 8 percent.

Analysts surveyed by Thomson Financial were expecting earnings of 60 cents per share on revenue of $13.79 billion.

In a conference call with analysts, Costco Chief Financial Officer Richard Galanti said the company also was “comfortable” with Thomson Financial estimates for the fiscal third and fourth quarters. Analysts are expecting earnings of 50 cents per share in the third quarter, and 76 cents per share in the fiscal fourth quarter.

•Fidelity Investments said Thursday its 2005 profit grew 20 percent to $1.3 billion, even though the nation’s largest mutual fund manager fell far behind rivals in attracting new mutual fund investors.

The privately held company has diversified in recent years by adding new businesses beyond its core mutual funds, and the financial numbers it included in its annual report showed several bright spots in noncore areas. For example, assets that Fidelity administers in brokerage and retirement accounts increased 17 percent from the previous year, with overall assets under management rising 9 percent to $1.2 trillion.

Fidelity’s net income grew from $1.11 billion in 2004 to $1.33 billion last year, the second-biggest annual profit for the company ever. Fidelity’s 2005 revenue rose 10 percent to $11.1 billion — the highest since 2001.