Update: Costco FY '07 earnings top $1 billion

ISSAQUAH, Wash. Costco today reported stronger than expected fourth quarter sales that boosted earnings for its full year over $1 billion.

In an Oct. 10 conference call, Costco reported $372.4 million in earnings for its fourth quarter ended Sept. 2 and $20.09 billion in revenue. Same store sales during the quarter rose 5%.  For the full year, Costco reported $1.08 billion in earnings – just below the record $1.1 billion posted in fiscal 2006 – and $60.9 billion in revenue.  

Costco evp and cfo Richard Galanti said the 520-store chain opened 30 new stores in 2007, with 25 openings in the U.S., 3 in Canada and one each in Japan and the U.K. Costco is planning 35 new openings in fiscal 2008 along with 8 to 10 relocations.

As usual, it reported a strong increase in average sales per warehouse for the year. “We averaged $130 million in sales per store compared to $127 million last year,” said Galanti. Costco also saw a big increase in business outside of its stores, with sales at Costco Online increasing 39% to $1.2 billion.

And Costco reported positive results from its new 90-day return policy on consumer electronics. He said it would take months for the company to gauge the financial impact it’s having on the category but that customers on the whole have been receptive. “We’ve seen a very positive response and most customers seem to agree that it (the old return policy) was being abused,” said Galanti.

Costco got off to a good start for fiscal 2008 with a 6% jump in September same-store sales, rebounding from a weak 2% increase in August. There are some concerns about the economy heading into next year, but Galanti said its September sales have Costco “pretty optimistic about the year so far.”