Costco Wholesale Corp.’s fiscal third-quarter profit fell 29 percent because of softer sales and a litigation charge for the warehouse club operator.
Costco has been one of the more resilient retailers during the recession as shoppers go to its membership clubs for deals on food and everyday items. But it said Thursday that its total sales slid during the quarter that ended May 10 because of the stronger dollar’s impact on foreign sales and a continued slump in spending on higher-ticket discretionary items.
Costco’s management said falling prices on its goods and the lackluster consumer appetite shaped the quarter – with soft sales of items like jewelry but strong sales of fresh fruit and other consumables.
The Issaquah, Wash.-based warehouse club operator earned $209.6 million, or 48 cents per share, for its fiscal third quarter. That’s down from $295.1 million, or 67 cents per share, a year earlier.
Included in the latest quarter’s results was a $34 million, pre-tax charge related to a settlement of a class-action lawsuit over its membership renewal policy.
Revenue dropped 5 percent to $15.81 billion from $16.61 billion.
State’s top economist optimistic on recession
The state’s chief economist sees more signs that the recession could be nearing an end in Washington.
Nationally, many experts say the recession could end later this year. In a preliminary report released Thursday, the state’s Economic and Revenue Forecast Council said the local economy should bottom out at about the same time.
Washington’s unemployment rate is currently 9.1 percent. And Forecast Council director Arun Raha said the jobless rate could still peak in the second quarter of 2010, at about 10.6 percent.
Raha’s preliminary report also says weak but positive job growth could resume in Washington in early 2010.
The Forecast Council issues an official economic forecast next month, with more details on the state’s economy.
Toys R Us buys rival upscale FAO Schwarz
Geoffrey the Giraffe became a knight in shining armor for toy retailer FAO Schwarz, as Toys R Us Inc. said it acquired the troubled high-end retailer, which has struggled for years through bankruptcies amid tough competition from discount stores.
Analysts said privately held FAO Schwarz – immortalized in the 1988 Tom Hanks movie “Big” – was in danger of closing if a buyer did not materialize. Privately held Toys R Us – the largest U.S. toy retailer – meanwhile, will get an opportunity to work with smaller toy vendors, cut costs and operate a marquee store on 5th Avenue. Toys R Us announced the deal late Wednesday.
From wire reports
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