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Costco Lowers Earnings Guidance

Shares of Costco Wholesale gave back some of today's gains after the retailer released earnings guidance below what analysts had been looking for.

Costco said it expects profits of 62 cents to 66 cents a share in the second quarter -- well below Thomson Financial's analyst consensus of 68 cents a share. Costco also lowered guidance for fiscal 2007 to $2.50 to $2.60 a share. In mid-October, Costco said it predicted fiscal 2007 earnings of $2.50 to $2.65 a year. Before the announcement, analysts were looking for 2007 profits of $2.59 a share.

Earlier today, the nation's largest wholesale club operator, on Thursday posted a fiscal first-quarter profit rise of 10% and said it would take a second-quarter charge related to stock option grants.

For the quarter ending Nov. 26, net income totaled $236.9 million, or 51 cents per share, compared with $215.8 million, or 45 cents per share, a year ago. Revenue climbed 9 percent to $13.85 billion from $12.67 billion last year.

Analysts polled by Thomson Financial were looking for earnings of 50 cents per share on sales of $14.06 billion.

Sales at stores open a year, a key industry gauge called same-store sales, rose 4%.

In connection with its review of stock option grants, Costco said it will increase the price on certain options granted from 2000 to 2003 and make payments to employees to cover new taxes that may occur. As a result, the company expects a one-time second-quarter charge of $45 million.

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