Costco Wholesale saw first-quarter profits jump 2.6 percent and revenue rise 13 percent in its fiscal first quarter of 2012, the company announced Thursday.
Net income was up to $320 million for the quarter ending Nov. 20, compared to $312 million over the same period last year. Net sales increased 13 percent, to $21.18 billion this year from $18.82 billion in the first quarter of 2011. That slightly missed analysts' expectations of $21.29 billion, according to a FactSet survey.
The main contributors to Costco's first-quarter success: higher gas prices, strengthening foreign currencies and a jump in membership fees.
With the strong quarter results, Costco remains a retailer that has survived through the sluggish economy -- even prospered. In the conference call, Richard A. Galanti, Costco's executive vice president and chief financial officer, acknowledged the pressure on the company's gross margins from time to time. But he said that Costco was first and foremost a company focused on sales.
We did choose to be a little more aggressive in pricing going into the fall and Christmas holiday season. We all see what's going on in the economy, Galanti said in a conference call with investors Thursday. We've been aggressive on inventory levels, and we wanted to drive our top line sales. We believe we have done that.
Costco recently increased annual membership fees in the U.S. and Canada -- from $50 to $55 for primary memberships and from $100 to $110 for executive memberships.
Identical-store sales, however, jumped 10 percent in the first quarter, as buyers purchased even more items beyond food, which is one of the reasons Costco improved in the down economy. This quarter, customers purchased higher quantities of items like jewelry, books and luxuries in addition to food necessities.
Galanti added that it was important to entice shoppers with lower prices, especially heading into Black Friday and the holiday shopping season.
Shares of Costco fell almost 2 percent to $85.76 in trading Thursday.