Costco profit rises less than 1%

ISSAQUAH, WASH. — Warehouse-club operator Costco Wholesale Corp. reported nearly flat first-quarter profit Thursday, citing the stronger dollar and cuts by U.S. consumers in spending on nonessentials.

Profit for the three months ended Nov. 23 rose less than 1%, to $262.5 million, or 60 cents a share, from $262 million, or 59 cents, a year earlier. The results include charges of 5 cents a share related to an accounting adjustment stemming from life insurance contracts and a write-down on corporate investments.

Revenue increased 4% to $16.39 billion.

Analysts polled by Thomson Reuters, on average, predicted a profit of 62 cents a share on revenue of $16.6 billion. Analyst estimates typically exclude one-time items.

The Issaquah, Wash., company said in October that it expected to earn 61 cents to 65 cents a share.

Costco said consumers pulled back on spending on nearly all items outside food, especially in the later part of the quarter, despite more aggressive pricing.

“I think people’s habits have changed,” said Richard Galanti, chief financial officer.

The only exception in the trend away from nonfood items was an uptick in television sales in November, thanks to a glut of inventory at some vendors, which allowed Costco to lower prices.

Sales at stores open at least one year, a key retail metric, rose 1%, including a 3% rise in the U.S. and a 7% decline internationally.

Costco operates 550 warehouses in the U.S. and Puerto Rico, Canada, Britain, South Korea, Taiwan, Japan and Mexico.

Shares of Costco fell $1.63, or 3%, to $52.06.