ISSAQUAH, Wash.–Third-quarter net income for Costco dropped 29 percent to $209.6 million.
Richard Galanti, chief financial officer for the warehouse-club retailer, said the dive in the bottom line occurred largely because of a pretax charge related to a litigation settlement concerning its membership renewal policy; higher costs for employee benefits, mainly from an increased use of health care; reduced profits from international operations, due to a strengthening in the U.S. dollar; and ongoing weakness in sales. Net sales in the third quarter declined by 5 percent to $15.5 billion, with much of this decrease coming from lower sales of higher-ticket, discretionary items, Galanti said.
Same-store sales for Costco fell 7 percent in the third quarter, driven down by a 12 percent fall in comparable-store sales in the international clubs. Same-store sales for the U.S. clubs slipped 5 percent.