Retail News Breaks
Profits fall at Costco, Kroger
March 6th, 2014
NEW YORK – Costco Wholesale Corp. and Kroger Co. each reported profit declines in their most recent fiscal quarters. But while Costco's results missed analysts' forecasts, Kroger's beat expectations.
Costco's quarterly profit fell 15% in the 12 weeks ended February 16, 2014, to $463 million. Net sales for the second quarter increased 6%, to $25.76 billion, and comparable sales were up 2% for the company as a whole (or 4% when the negative impacts of gasoline price deflation and foreign exchange are excluded).
"Despite satisfactory sales results during the second fiscal quarter, several other factors led to lower earnings," said Costco chief financial officer Richard Galanti. "These factors included: weaker sales and gross margin results in certain non-foods merchandise categories, particularly during the four-week holiday selling season; weaker gross margins in our fresh foods business; and lower reported international profits, resulting from the significant weakening of foreign exchange rates. The first four-week period of the quarter represented the majority of earnings underperformance in the quarter."
Kroger reported fourth quarter net earnings of $422 million, down about 8.7% compared to the prior year period. But the company says that net earnings per diluted share for the fourth quarter grew 10% when adjustment items are excluded, an extra week in 2012 is accounted for, and the the 2012 LIFO credit is made comparable to the 2013 charge.
Kroger reported total sales of $23.2 billion in the fourth quarter, which ended February 1, 2014. After adjusting for the extra week in the fourth quarter last year, total sales increased by 4.8%. On this basis and without fuel, total sales increased by 4.4%.
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