Costco cuts ties with Arthur Andersen - Market Watch - changing auditors; 3rd-quarter earnings report - Brief Article - Statistical Data Included

DSN Retailing Today, June 10, 2002

HUDSON, OHIO AND ISSAQUAH, WASH. -- Costco Wholesale and JoAnn Stores are the two most recent retailers to dump Arthur Anderson as their independent auditor in the wake of the accounting firm's troubles with Enron. Arthur Anderson had been Costco's auditor since 1983.

In other Costco news, the No. 1 U.S. warehouse club chain announced that third quarter net income increased 24% to $130.4 million, or 28 cents per diluted share, from last year's $105.3 million, or 23 cents per share. According to Thomson Financial/First Call, analysts consensus estimate for the quarter was 27 cents per share. Sales increased 12% to $8.44 billion from $7.56 billion in the year-ago period. Same store sales rose 6% and during a May 30 conference call, Costco executives said they expect a similar rise of 5% to 6% in same store sales for the fourth quarter. Executives also said membership fees rose to $179.9 million compared with $155.4 million in the year-ago quarter. At the end of the third quarter, Costco had 22.1 million members, up 8.3% on an annualized basis. Costco is expected to open 16 to 18 warehouses, which includes the relocation of one warehouse to a larger site, by the end of 2002.