Business NEWS

Costco Wholesale’s Profit Falls, CFO Richard Galanti says higher employee benefit costs a reason

By Germaine Lombardo for CEOWORLD Magazine Updated:October 7, 2009

Costco Wholesale Corporation (NASDAQ: COST) announced today its operating results for the 16 weeks (fourth quarter) and the 52 weeks (fiscal year) ended August 30, 2009, and its September sales results.

Net sales for the fiscal 2009 fourth quarter, the 16 weeks ended August 30, 2009, were $21.89 billion, a decrease of three percent from $22.63 billion in the 16-week fourth quarter of fiscal 2008 ended August 31, 2008. Net sales for the 52-week fiscal year 2009 were $69.89 billion, a decrease of two percent from $70.98 billion in the 52-week fiscal year 2008 ended August 31, 2008.

Net income for the fourth quarter of fiscal year 2009 was $374 million, or $.85 per diluted share, compared to $398 million, or $.90 per diluted share, during the fourth quarter of fiscal 2008. Results benefited from a LIFO credit of $17 million ($11 million, or $.02 per diluted share, after-tax). Fiscal year 2008 fourth quarter results included a non-cash pre-tax LIFO charge of $32 million ($21 million, or $.05 per diluted share, after-tax), and a $16 million pre-tax charge ($10 million, or $.02 per diluted share, after-tax) recorded in connection with a litigation settlement.

Net income for fiscal 2009 was $1.09 billion, or $2.47 per diluted share, compared to $1.28 billion, or $2.89 per diluted share, during fiscal year 2008. The fiscal 2009 results include: a $32 million pretax LIFO credit, reversing the prior year’s $32 million pretax LIFO charge; a $23 million pretax mark-to-market charge to the cash surrender value of certain life insurance contracts; and a $34 million pretax third-quarter charge related to a litigation settlement concerning our membership renewal policy.

According to Richard Galanti, Chief Financial Officer of Costco, “Fiscal 2009 results, including those of the fourth quarter, were negatively impacted by these previously reported factors: on-going softness in U.S. sales, primarily the result of a weak economic environment; higher employee benefit costs, mainly consisting of higher health care eligibility and usage; and lower U.S. dollar amounts of international profits as a result of weaker foreign currencies.”

Like this article! ‹ Fannie, Freddie plan to aid mortgage banks Monsanto reports larger loss widens On Restructuring Charges ›
Share this Post: Get It Delivered To Your Inbox