FINANCE

Costco Warns on Fourth-Quarter and Yearly Profit

BY CSA STAFF

Issaquah, Wash. Costco Wholesale Corp. said Wednesday its fiscal fourth-quarter and full-year profit will miss Wall Street expectations, as the warehouse-club operator expects higher energy costs to crimp its bottom line.

The company also said it would expand its stock repurchase plan by $1 billion.

For the fourth quarter, analysts polled by Thomson Financial expect $1 per share in profit, and Costco said it expects earnings “well below” this estimate. Analysts expect full-year earnings of $2.99 per share, according to Thomson.

“Factors negatively affecting our fourth-quarter earnings outlook arise largely from inflation, particularly as to energy costs,” Costco CFO Richard Galanti said in a statement.

The outlook reflects weakness in the company’s gasoline operations and slightly lower-than-planned merchandise profits as the company holds back on price increases to drive sales.

Galanti also said a greater-than-anticipated LIFO charge, which refers to the last-in-first-out method that assumes the most recent inventory purchases or goods manufactured are sold first. During times of rising prices, that results in a charge that eliminates inflationary profits from net income.

The company also said its board expanded its buyback plan by up to $1 billion, which is in addition to the $5.8 billion already authorized, and it declared a quarterly cash dividend of 16?, payable on Aug. 22 to shareholders of record on Aug. 8.

Costco plans to open seven to eight new warehouses (including the relocation of two warehouses to larger and better-located facilities) prior to the end of its 2008 fiscal year. It plans to open between 20 and 25 additional new units during the 2009 fiscal year.

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Zahari named president and ceo of Lalique North America

BY CSA STAFF

NEW YORK According to reports, Maz Zouhari has been named president and ceo of Lalique North America.

Zouhairi was previously serving as vp of sales and marketing. He succeeds Guillaume Gauthereau.

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Supervalu reports 9% net earnings increase

BY CSA STAFF

MINNEAPOLIS Supervalu reported sales and earnings for the first quarter of fiscal 2009. The company reported first quarter net sales of $13.3 billion compared to $13.3 billion last year, net earnings of $162 million, an increase of 9% compared to $148 million last year, and diluted earnings per share of 76 cents, an increase of 10% compared to 69 cents last year.

Jeff Noddle, Supervalu chairman and ceo said, While we are pleased with our record results and the continued progress of the Albertsons integration, the ongoing weakness in the economy combined with higher food and energy inflation has created conditions that make us take a more cautious view for the balance of the fiscal year. In light of the macroeconomic environment, we have updated our guidance and are responding with tighter expense controls and other cost-savings activities. We remain confident that we are doing the right things for the long-term health of our business and are effectively managing those factors under our control in order to create a foundation for sales momentum and future growth. 

The company said it expects earnings per diluted share for fiscal 2009 to be in the range of $3 to $3.16 per diluted share. Identical-stores sales growth, excluding fuel, is now projected to be approximately 0.5% compared to previous guidance of 1% to 2%.

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