Costco share price up, posts better results on tax benefit

Costco Wholesale Corp reported better-than-anticipated quarterly performance on Thursday as a tax benefit more than offset the negative impact of a ongoing tax matter.

The second-largest retailer in the U.S., lagging behind Wal-Mart Stores, reported a net income of $598 million, or $1.35 a share, for the three months ended February 15, compared to $463 million, or $1.05 a share, a year ago.

The company said income was hit by a $14-million, or $0.03 a share, tax charge in relation to a continuing income tax matter, which was offset by a tax benefit of $57 million, or $0.13 a share, in connection to the companys February special dividend of $5 a share.

The wholesaler stated a revenue of $27.45 billion, up 4.4% compared to last year. Same-store sales edged up 2%, including a 4% increase in the U.S. The company operates 671 warehouses spread across nine countries, including 474 in the U.S. and Puerto Rico.

In comparison analysts surveyed by Thomson Reuters had projected a profit of $1.18 a share on a revenue of $27.65 billion.

Costco said revenue from membership fees, which range from $25 to $110, increased to $582 million compared to the $550 million it reported a year ago.

Although the recent plunge in oil prices was expected to boost the performance of Costco in the near term, as the company is one of the largest gasoline retailers in the U.S., the wholesaler did not say whether it had benefited from the lower fuel prices.

Costco also reported sales of $8.18 billion for the four weeks ended March 1, up 4% compared to the same period a year ago. Same-store sales for the period were up 1%. Excluding currency shifts and the negative impact of lower gasoline prices, comparable sales climbed 8%, including a 12% increase in international sales.

Earlier this week Costco announced its will replace American Express with Visa and Citigroup as credit card partners after 16 years of alliance. Starting April 2016, Citi will become the exclusive issuer of Costco credit cards and Visa will replace Amex as credit card network in the U.S. and Puerto Rico.

Costco dropped 0.14% on Wednesday and closed at $147.17 on the NASDAQ, marking a one-year increase of 30.3%. The company is valued at $64.83 billion. On Thursday the stock edged up 2.26% to $150.5 during pre-market trading.

According to CNN Money, the 24 analysts offering 12-month price forecasts for Costco have a median target of $153.00, with a high estimate of $165.00 and a low estimate of $133.00. The median estimate represents a 3.96% increase from the last closing price.