Costco Wholesale Corp posted better-than-expected quarterly profit, helped by strong sales and increased fee revenue as consumers sought out its bulk offerings of food and other items.

Gross margins rose to 10.98 percent from 10.88 percent, though the improvement was less than some analysts expected due to strong sales of lower-margin gasoline.

Costco shares were down 7 cents to $69.57 in morning trade.

Costco said sales growth improved as the quarter progressed, helping to assuage concerns that tougher comparisons late in the year would make it harder for the company to show increased sales, especially during the key holiday sales season.

By all accounts, Black Friday and the weekend were strong for Costco as consumers bought doorbusters ... and again, stocked the pantry for holiday festivities, Wall Street Strategies analyst Brian Sozzi said in a research note.

Improvement in the California market, which makes up more than a quarter of Costco's sales, helped lift results, analysts said.

Last week, Costco, the largest U.S. warehouse club operator, said sales in the fiscal first quarter, ended November 21, rose 11 percent to $18.82 billion. On Wednesday, it said sales at stores open at least a year rose 7 percent, helped by higher gasoline prices.

Including membership fees, revenue rose 11.2 percent to $19.24 billion.

Costco, which sells bulk packages of everything from diapers to detergent, said quarterly profit was $312 million, or 71 cents per share, compared with $266 million, or 60 cents per share, a year earlier.

Analysts on average forecast 69 cents per share, according to Thomson Reuters I/B/E/S.

(Additional reporting by Abhinav Sharma in Bangalore; Editing by Dan Lalor and John Wallace)