DESPIRE HARROWING PREDICTIONS, COSTCO PREVAILS IN FOURTH QUARTER

Shares of the largest wine retailer jumped 7.5% after the company reported better than expected fourth quarter profit and September same-store sales earlier today. Costco posted a 7% increase in net sales for the 52 weeks ending Sept. 2, while comparable warehouse sales grew 6% for the year. Costco’s comparable sales for the 16-week fourth quarter and the fiscal year rose 4% and 5%, respectively, in the U.S. In the five weeks ending Oct. 7, comps rose 4% in the U.S.

Net income for the quarter through Sept. 2 increased to $372.4 million from $355.6 a year earlier. Net revenue rose 2.9% to $20.1 billion, the retailer said last month.

The surprisingly positive results from Costco eased investor concerns heading into the holiday season. Analysts had predicted that retailers would report their worst September sales in five months and worst holiday season in five years. The anticipated struggles were due to rising gasoline prices and a crunch in the housing market. Furthermore, analysts feared unusually warm weather could force retailers to increase discounts and promotions to drive holiday traffic.

A general feeling among analysts is that Costco benefited from its more upscale clientele, who do not feel as big of a crunch from rising gas prices and the downtrodden housing market.