Costco July same-store sales beat estimates

NEW YORK (Reuters) - Costco Wholesale Corp on Thursday reported a better-than-expected 10 percent rise in sales at stores open at least a year in July, as more shoppers searched for low prices on gasoline and food.

Analysts, on average, were expecting the company's same- store sales to rise 7.8 percent, according to Thomson Reuters Estimates.

Same-store sales at its U.S. locations increased 10 percent, while international division sales rose 11 percent.

Excluding gasoline price inflation, it said U.S. comparable sales would have been up 6 percent. On a local currency basis, international same-store sales increased 9 percent, it said.

Customers pay an annual fee to shop at Costco's clubs, which sell everything from digital cameras and watches to bulk-sized packages of toilet paper and water.

Many of its clubs also sell gasoline, luring shoppers looking to fill tanks with cheap fuel.

Costco, the No.1 U.S. warehouse club, said the average price for a gallon of gasoline during July was $3.98, up 41 percent from a year ago. The soaring price of gas helped boost its sales, as well as attract more shoppers into its clubs, the company said.

Costco also said its food business remained strong.

"We are of course continuing to benefit from some inflation on the food side as a result of the recent run up in the cost of commodities and the continued run up in the price of oil and gasoline," it said on the recorded call.

Costco's strongest domestic results were in the Midwest, Southeast, Texas and Northwest regions. California, where the company operates more than 110 of its 538 clubs, continued to lag, but showed improvements compared with the prior month, it said.

Total sales in the four weeks ended August 3 rose 14 percent to $5.70 billion.

The company plans to open an additional six new warehouses, including the relocation of one warehouse, before the end of its 2008 fiscal year on Aug 31.

(Reporting by Nicole Maestri in New York and Tenzin Pema in Bangalore; Editing by Louise Ireland and Andre Grenon)