Lower demand for non-food items and reduced international profits have taken their toll on Costco’s year-to-date results with net sales and net income down in both the third quarter and first 36 weeks of fiscal 2009, according to a company statement.
Net sales fell by 5 per cent in the third quarter of fiscal 2009 to US$15.48bn, down from US$16.26 billion during the third quarter of fiscal 2008.
Net sales for the first thirty-six weeks of fiscal 2009 also declined by 1 percent, to US$48bn, against US$48.35bn during the first 36 weeks of fiscal 2008.
Net income for the third quarter of fiscal 2009 was US$209m, or US$.48 per diluted share, compared with US$295.1m, or US$.67 per diluted share, during the third quarter of fiscal 2008.
Net income for the first 36 weeks of fiscal 2009 was US$711.m, or US$1.62 per diluted share, in comparison to net income for the first 36 weeks of fiscal 2008 of US$884.9m, or US$1.99 per diluted share.
“Third quarter 2009 earnings results were negatively impacted by several factors, including: a pre-tax charge of US$34m (mostly non-cash) related to a litigation settlement concerning our membership renewal policy; higher employee benefits costs, mainly consisting of higher health care usage; lower international profits, a result of the significant strengthening of the US dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico; and lastly, ongoing weakness in sales, particularly sales of higher-ticket, discretionary items,' said Richard Galanti, chief financial officer of Costco.
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