Costco reports Q3 sales fall

Warehouse club Costco reported that net sales declined 5% to USD15.48 billion during the third quarter of 2009. Comparable sales were down by 5% in the US and 12% in the international division, although the numbers were flat in the US without gas deflation and an increase of 8% in its international division without foreign exchange impacts. Net income for the third quarter was USD209.6 million, compared to USD295.1 million during the third quarter of fiscal 2008. Richard Galanti, Chief Financial Officer of Costco, stated that: "Third quarter 2009 earnings results were negatively impacted by several factors, including: a pre-tax charge of USD34 million (mostly non-cash) related to a litigation settlement concerning our membership renewal policy; higher employee benefits costs, mainly consisting of higher health care usage; lower international profits, as a result of the significant strengthening of the US dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico; and lastly, ongoing weakness in sales, particularly sales of higher-ticket, discretionary items."

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