COSTCO WILL FOCUS ON EXISTING MARKETS

DAVID GHITELMAN

ISSAQUAH, Wash. -- Costco Wholesale Corp. here said last week that it plans next year to build two-thirds of its new warehouse clubs in markets where it currently operates, in marked contrast to its previous strategy of focusing on new market openings.

During a conference call with industry analysts following the release of the company's results for the fourth quarter and fiscal year ended Sept. 1, Richard Galanti, Costco's chief financial officer, said the company plans to open 35 clubs next year, including four relocations.

Out of the 31 non-relocations, 19 will be in existing markets and only 12 in new markets, Galanti said. "We see many opportunities to infill existing markets profitably," he noted.

Galanti also said the company expects to have a capital spending budget of $1.1 billion in fiscal 2003, down from $1.4 billion in 2001 and $1.3 billion this year.

In the 16-week quarter, sales rose 11% to $12.1 billion, comparable-club sales were up 6%, net income increased 29.7% to $247.4 million, and earnings per share were 52 cents vs. 41 cents in the previous fourth quarter.

For the 52-week year, sales grew 11.4% to $38 billion, comps rose 6%, net income rose 16.3% to $700 million, and earnings per share were $1.48 vs. $1.39 in the previous year.