Costco Sees Profit Below Estimates; Plans Buyback

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Costco Sees Profit Below Estimates; Plans Buyback Wednesday, July 23, 2008
Bloomberg -- July 23 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. warehouse-club chain, said earnings will be ``well below'' analysts' estimates after surging energy prices increased the retailer's costs and made selling gasoline less profitable. Costco kept prices lower than planned to retain customers, Chief Financial Officer Richard Galanti said today in a statement, sending the shares down 9.7 percent in early New York trading. The Issaquah, Washington-based company also said it plans to buy back an extra $1 billion of its stock.
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JT Moderator	Message Posted: 7/23/2008 9:58:07 AM	Ignore JT Report Abuse
	Wednesday, July 23, 2008 Bloomberg -- July 23 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. warehouse-club chain, said earnings will be ``well below'' analysts' estimates after surging energy prices increased the retailer's costs and made selling gasoline less profitable. Costco kept prices lower than planned to retain customers, Chief Financial Officer Richard Galanti said today in a statement, sending the shares down 9.7 percent in early New York trading. The Issaquah, Washington-based company also said it plans to buy back an extra $1 billion of its stock. Visit Bloomberg for full article

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FarmTech Champion Author Virginia Posts:4,002 Points:817,480 Joined:May 2006	Message Posted: 7/25/2008 4:56:15 AM	Ignore FarmTech Report Abuse
	tz2001, Love your post. ======= no1lakersfam, Where are the FACTS and figures that support your statement, QUOTING: ""Keeping prices lower than planned?" Even with that they are the most expensive warehouse club out there." END Quote. See my response to member "franconia" below for more details and know that I have researched a number of discount warehouses/clubs--most notably Sam's Club--and find that Costco is the same OR LESS than they are. This goes for just about any other clubs. While Costco may NOT be the absolute lowest price you will find on any one item they may sell, it is a very good bet that they are so close to the competition that it does not matter. When you factor in such items as: 1) that is their Every Day Price, AND 2) their very generous customer satisifaction and returns policy, PLUS 3) an Executive Member can get an additional 1 percent annual rebate back on just about everything they sell, then they are the hands down winner. It is usually only special sale discounts at some speciality merchant that would be cheaper. For example, Circuit City may sell a CD or DVD with their weekly ad that would be less than at Costco. Certain clothing retailers may have a similar item on sale. However, these are limited sales and not the everyday price. Therefore, I have found that not only does our family save a lot of time spent searching for deals, we have saved enough to be able to buy a boat. ======= franconia, Do your homework and I would advise that you learn about something before you post it. As a Costco shareholder and one who was a member when it was known as The Price Club, I am very knowledgeble about their operations. First, Costco must charge a membership fee for several reasons. The most important is that they do not sell at retail and without getting into a whopping pile of details, Federal and nearly all State laws state that merchants can NOT do that. It actually goes back to arcane price-fixing laws. They are a private membership club and that LEGALLY allows them to sell their merchandise at prices basically just over wholesale. As for making money, it depends on the item. In general, after all expenses are paid, Costco makes about 3 percent. On some items, it can be more. As for the gasoline sales, those are now not making any profit. Costco was making about 1 cent per gallon in the state of VA. Now, they are selling it so that it just covers all of their operational expenses. From time to time (which usually WAS when they first opened a gas station), Costco had sold at a 1 to 2 cent per gallon loss.
DFleming Veteran Author Alberta Posts:352 Points:73,420 Joined:May 2008	Message Posted: 7/24/2008 10:05:08 AM	Ignore DFleming Report Abuse
	That's scary when the economy shopping giants start feeling the pinch.
WreckDiver59 Sophomore Author Detroit Posts:201 Points:87,075 Joined:May 2008	Message Posted: 7/24/2008 10:00:06 AM	Ignore WreckDiver59 Report Abuse
	The point in joining a warehouse club is to save money. If they don't make as much, the're giving you what you're supposed to get with your membership.
bbthegun All-Star Author San Diego Posts:911 Points:420,995 Joined:Sep 2006	Message Posted: 7/24/2008 9:57:23 AM	Ignore bbthegun Report Abuse
	Costco is very solvent and doing just fine.
FASTER345 Rookie Author Los Angeles Posts:57 Points:234,270 Joined:Apr 2006	Message Posted: 7/24/2008 9:50:32 AM	Ignore FASTER345 Report Abuse
	In my area (Los Angeles) Costco gas costs more than most Arcos and about the same as most Valeros. So there you go.
eaglechick Rookie Author Richmond Posts:49 Points:24,335 Joined:Aug 2006	Message Posted: 7/24/2008 9:49:19 AM	Ignore eaglechick Report Abuse
	It seems the only ones profiting lately is the oil companies. "Record" profits to be exact.
Jeannemarie Champion Author Las Vegas Posts:13,855 Points:978,910 Joined:Aug 2005	Message Posted: 7/24/2008 9:45:19 AM	Ignore Jeannemarie Report Abuse
	Buy back generally raises stock values. Hopefully.
jeepster23 Champion Author Massachusetts Posts:1,077 Points:336,065 Joined:Jan 2007	Message Posted: 7/24/2008 9:43:53 AM	Ignore jeepster23 Report Abuse
	Poor Costco
Shiff Champion Author Pennsylvania Posts:1,182 Points:343,855 Joined:May 2006	Message Posted: 7/24/2008 9:41:01 AM	Ignore Shiff Report Abuse
	The Costco here in the Lancaster, PA, area sells gas at usually a few pennies or so less than the other stations. Lines can be long.
Don20 Champion Author Oklahoma City Posts:1,334 Points:976,280 Joined:Mar 2005	Message Posted: 7/24/2008 9:38:55 AM	Ignore Don20 Report Abuse
	If you buy gas everyone's savings is down..
goose28in Veteran Author Michigan Posts:367 Points:75,640 Joined:Apr 2008	Message Posted: 7/24/2008 9:38:38 AM	Ignore goose28in Report Abuse
	Well that sucks.
EarlyMoose Champion Author Seattle Posts:1,712 Points:664,665 Joined:Dec 2005	Message Posted: 7/24/2008 9:37:27 AM	Ignore EarlyMoose Report Abuse
	I'll think about that when I go to Costco today.
Howmuchtofillit All-Star Author Trenton Posts:903 Points:142,655 Joined:Sep 2005	Message Posted: 7/24/2008 9:34:58 AM	Ignore Howmuchtofillit Report Abuse
	BOO HOOO, Hey I saw my savings lower then I predicted also.
bauerboy Sophomore Author Seattle Posts:155 Points:291,400 Joined:Apr 2003	Message Posted: 7/24/2008 9:34:12 AM	Ignore bauerboy Report Abuse
	Stock price down 15% in 2 days and Ford's value down 8% today due to fuel costs.
franconia Veteran Author Madison Posts:417 Points:705,995 Joined:Jan 2005	Message Posted: 7/24/2008 9:30:53 AM	Ignore franconia Report Abuse
	Supposedly Costco really only makes money on the membership fees and breaks even on the other stuff - they are opening a location near me next month so I am anxious to see if the gas is cheaper than the rest of the market.
Phantomwalker Rookie Author Nova Scotia Posts:9 Points:865 Joined:Jul 2008	Message Posted: 7/24/2008 9:30:52 AM	Ignore Phantomwalker Report Abuse
	We have Costco's here but none of which sell gas. To bad for me I guess
HockeyLady Champion Author New Jersey Posts:1,106 Points:896,610 Joined:Jun 2005	Message Posted: 7/24/2008 9:29:27 AM	Ignore HockeyLady Report Abuse
	too far away from me
UTOrangeMan Champion Author Atlanta Posts:1,880 Points:189,800 Joined:Mar 2008	Message Posted: 7/24/2008 9:27:17 AM	Ignore UTOrangeMan Report Abuse
	I wish I had a billion to buy stock.
JB1881 Champion Author New Mexico Posts:1,465 Points:364,035 Joined:Aug 2007	Message Posted: 7/24/2008 9:27:12 AM	Ignore JB1881 Report Abuse
	So it's the oil companies falt that Costco sells gas cheaper than everyone else?
Dale Jr. Champion Author Iowa Posts:7,820 Points:1,573,425 Joined:May 2004	Message Posted: 7/24/2008 9:26:18 AM	Ignore Dale Jr. Report Abuse
	There are no Costco's where I live.
RC_RACER Champion Author Tacoma Posts:1,027 Points:233,225 Joined:Jun 2004	Message Posted: 7/24/2008 9:25:49 AM	Ignore RC_RACER Report Abuse
	thanks big oil, this is going to be the norm for 2008 and on.
AuburnTim Champion Author Indiana Posts:1,179 Points:334,870 Joined:May 2005	Message Posted: 7/24/2008 9:25:29 AM	Ignore AuburnTim Report Abuse
	Not surprising I don't spend any money on anything but gas and food and whatever I save there is eatin up when I pay my bills electricity and gas those are up big time too. So I don't have anything to spend so its not surprising that companies are going to report losses cause I am not alone
woos777 Champion Author Washington Posts:1,425 Points:632,605 Joined:Sep 2006	Message Posted: 7/24/2008 9:24:09 AM	Ignore woos777 Report Abuse
	Well put PokerAce
SlugBuggy Sophomore Author Colorado Springs Posts:173 Points:90,085 Joined:Apr 2008	Message Posted: 7/24/2008 9:24:07 AM	Ignore SlugBuggy Report Abuse
	"So is it the lower gas sales or the lack of people driving there to spend money . . ." I'd say it's a combination of both. With less discretionary income, folks aren't as inclined to spend a lot of money on bulk items they may/may not use in the coming months. When it's a choice between the 5 gallon tub of butter and putting fuel in your vehicle so you can go to work...
tomok Champion Author Portland Posts:8,830 Points:679,835 Joined:Aug 2006	Message Posted: 7/24/2008 9:24:03 AM	Ignore tomok Report Abuse
	I have bought many items at Costco and at good prices - food or otherwise. Costco gas can be cheap or not - depends on the gas stations surrounding the location. thats the purpose of this site - find the cheapest fuel, thats close.
Wolfwings All-Star Author Delaware Posts:717 Points:230,185 Joined:May 2004	Message Posted: 7/24/2008 9:22:53 AM	Ignore Wolfwings Report Abuse
	No Costco's have gas near me
PokerAce Champion Author Louisiana Posts:1,262 Points:257,630 Joined:Jan 2008	Message Posted: 7/24/2008 9:22:34 AM	Ignore PokerAce Report Abuse
	Costs costing Costco....
iluna Veteran Author Colorado Springs Posts:458 Points:76,545 Joined:Jun 2007	Message Posted: 7/24/2008 9:22:28 AM	Ignore iluna Report Abuse
	Good question Lonewolftx. We all know it's both, but "they" don't seem to "get it."
kevski Champion Author Oregon Posts:1,167 Points:159,065 Joined:Feb 2008	Message Posted: 7/24/2008 9:20:33 AM	Ignore kevski Report Abuse
	not too worried about costco making it
Lonewolftx Champion Author Houston Posts:5,523 Points:1,086,485 Joined:Sep 2005	Message Posted: 7/24/2008 9:20:06 AM	Ignore Lonewolftx Report Abuse
	So is it the lower gas sales or the lack of people driving there to spend money . . .
tbybee Sophomore Author Omaha Posts:169 Points:80,960 Joined:Apr 2008	Message Posted: 7/24/2008 9:18:44 AM	Ignore tbybee Report Abuse
	Not a shock -- high energy costs effect everyone.
SeerLV Veteran Author Las Vegas Posts:392 Points:100,140 Joined:Jun 2008	Message Posted: 7/24/2008 9:17:13 AM	Ignore SeerLV Report Abuse
	COSTCO will survive
dannyshouse Rookie Author San Francisco Posts:32 Points:123,905 Joined:Apr 2008	Message Posted: 7/24/2008 9:16:57 AM	Ignore dannyshouse Report Abuse
	Costco is usually the cheapest in our suburban area just south of San Francisco. Sometimes 30 cents a gallon cheaper than in the local cities. Business is always brisk--they bring in double tankers of fuel at least four times a day!
FizedNH Champion Author New Hampshire Posts:1,086 Points:206,295 Joined:Nov 2007	Message Posted: 7/24/2008 9:14:26 AM	Ignore FizedNH Report Abuse
	Bound to happen...
tz2001 Sophomore Author Virginia Posts:108 Points:210,900 Joined:Sep 2003	Message Posted: 7/24/2008 9:14:06 AM	Ignore tz2001 Report Abuse
	What a bunch of whiners. Here is a retailer selling gasoline at a loss and with their free AmEx card you get an extra 3% off the price! Costco sells plenty of high-quality cheese to go with that low-quality whine!
eaglev All-Star Author Oklahoma City Posts:778 Points:292,545 Joined:Jul 2005	Message Posted: 7/24/2008 9:14:00 AM	Ignore eaglev Report Abuse
	Energy cost are hitting eveyone. Wake up Congress pass the bill to allow drilling NOW!!!
Chazzer Champion Author Nevada Posts:7,886 Points:1,692,135 Joined:May 2002	Message Posted: 7/24/2008 9:12:59 AM	Ignore Chazzer Report Abuse
	And almost every other business in the country!
BrianGriffin Veteran Author Victoria Posts:460 Points:46,085 Joined:Jun 2008	Message Posted: 7/24/2008 9:12:24 AM	Ignore BrianGriffin Report Abuse
	Not a surprise. . . energy prices will have a larger effect on the little guys.
SpruceGuse2 Champion Author Michigan Posts:1,523 Points:823,600 Joined:Mar 2006	Message Posted: 7/24/2008 9:12:04 AM	Ignore SpruceGuse2 Report Abuse
	Oh Well.............................
siouxbear Champion Author Ontario Posts:6,348 Points:504,185 Joined:Aug 2006	Message Posted: 7/24/2008 9:07:13 AM	Ignore siouxbear Report Abuse
	Ifeel real sorry for the big guys what about the mom and pop stores!
roadkillGA Champion Author Georgia Posts:1,059 Points:104,740 Joined:Jun 2008	Message Posted: 7/24/2008 9:05:54 AM	Ignore roadkillGA Report Abuse
	Old news
amacquarrie Sophomore Author Nevada Posts:224 Points:55,355 Joined:Jun 2008	Message Posted: 7/24/2008 9:04:48 AM	Ignore amacquarrie Report Abuse
	wow - holding back prices, that's a first
t4204life Champion Author Ohio Posts:4,097 Points:814,160 Joined:Jun 2006	Message Posted: 7/24/2008 9:03:47 AM	Ignore t4204life Report Abuse
	hate it when that happens.
Somis1 Champion Author Ventura Posts:4,685 Points:1,028,400 Joined:Jul 2005	Message Posted: 7/24/2008 9:03:03 AM	Ignore Somis1 Report Abuse
	This shows what a huge gasoline business they do.
Brn2bEvl All-Star Author New York Posts:637 Points:141,575 Joined:Apr 2008	Message Posted: 7/24/2008 9:01:08 AM	Ignore Brn2bEvl Report Abuse
	Poora!Poora! Costco!!! Life is tough!!
Dennis783 Champion Author Wisconsin Posts:5,408 Points:1,084,420 Joined:Sep 2005	Message Posted: 7/24/2008 9:00:42 AM	Ignore Dennis783 Report Abuse
	High energy costs affect everything
no1lakersfam Champion Author Virginia Beach Posts:7,437 Points:1,212,455 Joined:Aug 2004	Message Posted: 7/24/2008 8:58:18 AM	Ignore no1lakersfam Report Abuse
	"Keeping prices lower than planned?" Even with that they are the most expensive warehouse club out there. I know that does not have any bearing on earnings, but everyone is feeling the pinch of the economy.
njteech Champion Author New Jersey Posts:4,208 Points:1,117,410 Joined:Aug 2004	Message Posted: 7/24/2008 8:58:10 AM	Ignore njteech Report Abuse
	Don't have a gas Costco around here....too bad
Egaser Veteran Author Atlanta Posts:345 Points:131,435 Joined:Apr 2006	Message Posted: 7/24/2008 8:53:41 AM	Ignore Egaser Report Abuse
	Does this mean my gross of pretzels will be higher?