Costco earnings edge up

Costco Wholesale Corp. said Thursday its fourth-quarter profits edged up slightly, driven by a rise in sales and membership fees and unexpectedly strong operating results late in the quarter.

The results beat Wall Street estimates, and Costco shares surged almost 8 percent, rising $4 to $54.07 on the Nasdaq Stock Market.

Net income at the nation’s largest wholesale club operator grew to $355.6 million, or 75 cents per share, for the 17-week period ending Sept. 3, up 0.25 percent from $354.7 million, or 73 cents per share, a year ago.

The year-ago period was a week shorter and included several one-time expenses. Excluding those items, the company said it earned 66 cents per share in the 2005 quarter.

Revenue, including sales and membership fees, increased 19 percent to $19.9 billion, compared to $16.7 billion last year. Sales at warehouses open at least a year jumped 8 percent.

Analysts polled by Thomson Financial were predicting earnings of 73 cents per share on $19.1 billion in revenue.

Also on Thursday, Costco said a committee it appointed, along with independent counsel and forensics experts, had found no evidence of fraud in an internal review of the company’s stock option grant practices.

However, the company did note that in several cases, the review could not precisely determine the date on which certain options were granted — only a range of dates.

“Another quarter of surging international sales pushed Harley-Davidson Inc.’s third-quarter profit up a better-than-expected 18 percent.

The iconic motorcycle maker said Thursday growth in international sales will continue to outpace domestic sales.

Net income for the quarter ended Sept. 24 totaled $312.7 million, or $1.20 per share, compared with a profit of $265 million, or 96 cents per share, a year ago. Revenue climbed 14 percent to $1.64 billion from $1.43 billion last year.

Analysts expected a profit of $1.10 per share on revenue of $1.58 billion, according to a poll by Thomson Financial.

Worldwide retail sales of Harley-Davidson motorcycles grew 8.9 percent, largely driven by an international sales increase of 18.7 percent. Domestic retails sales were up 6.7 percent for the quarter.

“PepsiCo Inc. says higher costs for oranges pressured profits in the latest quarter and are expected to cut into the soft drink and snack foods maker’s earnings after the government reported the worst crop in 16 years.

The outlook sent shares of PepsiCo, which makes Tropicana Pure Premium and Tropicana Season’s Best, lower on Thursday even though its third-quarter net income jumped 71 percent from results depressed by a tax charge a year ago.

Sales were up 9.4 percent, but the company said higher costs hurt its North American beverage results and its forecast for the year was below Wall Street expectations.

Chief Executive Indra Nooyi said the single biggest driver of pressure on profit was the cost of orange juice for its Tropicana products. She said the cost issue was “more structural than temporary.”

“Safeway Inc.’s third-quarter profit met analyst expectations, but a cautious holiday shopping forecast disappointed investors who had been betting the grocer’s recent recovery would accelerate.

The Pleasanton, Calif.-based company said Thursday that it made $173.5 million, or 39 cents per share, for the 12 weeks ended Sept. 9 to match the average estimate among analysts polled by Thomson Financial.

The profit represented a 42 percent increase from the same time last year when Safeway posted net income of $122.5 million, or 27 cents per share. The earnings increase would have been 22 percent, if not for charges that depressed last year’s results.