Costco posts higher-than-expected same-store sales

LOS ANGELES (Reuters) - Costco Wholesale Corp (COST.O) on Thursday reported a better-than-expected 9 percent rise in May sales at stores open at least a year, helped by high gasoline and food prices as well as the weak dollar.

This was the company's biggest overall same-store sales increase since November, and shares of the largest U.S. warehouse club operator rose more than 3 percent.

Analysts on average had expected a same-store sales gain of 6.9 percent, according to Thomson Reuters data.

Stifel Nicolaus analyst David Schick said Costco, with its focus on selling value-priced goods, was a relatively safe haven for investors.

Customers pay an annual fee to shop at the company's warehouse locations, which sell everything from digital cameras and watches to bulk-sized packages of toilet paper and soda.

The core Costco business, which excludes gas and foreign exchange benefits, remains robust, Schick said.

The company did say declining tobacco sales and competition among stores in the chain dragged on results.

Net sales for the four weeks ended on June 1 rose 12 percent to $5.77 billion.

Costco and discount retailer Wal-Mart Stores Inc (WMT.N) have outperformed the retail sector as consumers cut back in response to a weak U.S. economy, tight credit and soaring prices for necessities like food and gasoline.

May sales at Wal-Mart also topped analysts' targets, and the world's largest retailer on Thursday said shoppers cashed about $350 million worth of tax rebate checks in its stores during the month.

Costco, which targets more upscale shoppers than Wal-Mart, did not cash rebate checks.

Still, both companies said the checks appeared to have a positive effect on sales.

"There was probably some benefit in there, but measuring it was impossible," Costco spokesman Bob Nelson said.

U.S. AND INTERNATIONAL

Same-store sales increased 7 percent at Costco's U.S. locations.

About 2 percentage points of that gain came from higher gas prices, which rose to an average of $3.67 a gallon from $3.09 in May 2007. With prices now above $4 per gallon, the company expects an even bigger boost to sales in June.