First Impression of Costco's 4Q

Comparable-sales fell 5% during the fourth quarter (or a 1% gain excluding gasoline deflation and foreign currency translation), including declines of 6% and 3% in the U.S. and international segments, respectively. However, fiscal 2010 got off to a solid start in September, with total comparable-sales increasing 1% (a 4% increase excluding gasoline deflation and foreign exchange translation). We expect gasoline deflation and foreign currency translation to be less of a head wind in coming periods, resulting in stronger top-line growth. The gross margin (excluding membership fees) improved 60 basis points during the quarter because of higher merchandise margins in the firm's core business, increased private-label penetration, and fewer gasoline sales (which carry a lower margin than other merchandise categories)--a trend we expect to continue over the next few quarters.