Costco Wholesale Corp. reported a 32 percent jump in its fiscal third-quarter profit Thursday, topping Wall Street expectations, as cash-squeezed customers flocked to its warehouse clubs in search of bargains on food and toiletries.Costco reported net income rose to $295.1 million, or 67 cents per share, from $224 million, or 49 cents per share, a year ago, which included a $30.3 million charge. Sales increased 13 percent to $16.26 billion from $14.34 billion in a year-ago period. Including membership fees, revenue rose to $16.61 billion from $14.66 billion.

Analysts surveyed by Thomson Financial had expected a profit of 65 cents per share on revenue of $16.35 billion.

In morning trading, shares of Issaquah, Wash.-based Costco rose 73 cents to $73.97.



Net sales for the first three quarters of fiscal 2008 increased 12 percent to $48.35 billion from $43 billion during the same period last year. Excluding the sales return reserve adjustments recorded in the second and third quarters of fiscal 2007, which totaled $452.6 million, the net sales increase would have been 11 percent.

Same-store sales, the key retail performance measure that considers sales at stores open for at least a year, rose 4 percent in the U.S. excluding gas price inflation. International same-store sales rose 6 percent excluding the effect of the weak U.S. dollar. Costco operates 538 warehouses in the U.S., Canada, the U.K., Korea, Taiwan, Japan and Mexico.

Discount warehouses and stores like Costco and Wal-Mart have stood apart from other retailers as consumers squeezed by record gas and food prices hunt for bargains and buy in bulk.

Sears Holdings Corp. didn't fare as well. The company posted a $56 million quarterly loss Thursday, falling well short of lowered expectations. The retailer cited stiff competition and said sales fell nearly 6 percent to $11.1 billion.

But while rising food prices helped drive people to Costco in the quarter, Banc of America Securities analyst David Strasser wrote in a note to investors that rising gas prices in the last four weeks of the quarter likely cut into the company's margins.

Costco, which also sells iPods, flat-screen TVs and all manner of other high-end items, may yet fall victim to eroding consumer confidence, wrote Stifel Nicolaus & Co. analyst David Schick in a research note.

"It's hard to poke too many holes in this story, but we do believe (the) high-end consumer is showing cracks, and that could continue to hurt durable sales at the company," he wrote.

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AP Business Writer Jennifer Malloy in New York contributed to this report.

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