Company News: Costco profit drops 16 percent

Warehouse retailer Costco Wholesale Corp. said Thursday its fiscal second-quarter profit dropped 16 percent, hurt in part by costs associated with revamping its consumer electronics return policy.

Net income for the quarter ended Feb. 18 fell to $249.5 million, or 54 cents per share, from $296.2 million, or 62 cents per share a year ago.

Last week, Costco announced a new return policy for consumer electronics devices including televisions, computers, cameras, camcorders, digital music players and cell phones. In the past, the company gave customers unlimited time to return those items, but the new policy shortens that window to 90 days.

In a conference call with investors Thursday, Costco Chief Financial Officer Richard Galanti said the company conducted a detailed review of when customers were returning items such as televisions, which he said bring in about $2.5 billion in revenue each year. Costco found that “the lag time for certain returns is longer than previously estimated,” Galanti said.

“McDonald’s Corp. said Thursday that global same-store sales rose 5.7 percent in February, buoyed by strong results in Japan, China and Europe.

Same-store sales, or sales in stores open at least 13 months, are a key measure of industry performance. Last year, same-store sales rose 4.7 percent in February.

Total sales for McDonald’s restaurants worldwide grew 9.7 percent in February, or 6.8 percent in constant currencies.

European same-store sales grew 5.9 percent, helped by seasonal menu items that generated strong demand in France and Germany. Asia/Pacific, Middle East and Africa same-store sales rose 12.3 percent.

In the U.S., same-store sales grew 3.1 percent, helped by breakfast and late-night menu options and a new grilled and honey-mustard Snack Wrap.

“Three of the world’s top spirits makers — Pernod Ricard SA, Bacardi Ltd. and Diageo PLC — have told the Swedish government they are interested in buying the state-owned liquor group that makes Absolut vodka, a spokeswoman said Thursday.

The center-right government presented plans last week to sell the V&S Vin & Sprit AB liquor group as part of wider privatization plans. V&S owns several brands of liquor and wine, with Absolut its biggest moneymaker.

“We have received letters of interest from Bacardi and Pernod, and Diageo has expressed an interest orally,” Jenny Didong, a spokeswoman at the unit handling the sellout, told The Associated Press.