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Costco’s profit soars in Q3

BY Allison Cerra

Wholesaler Costco saw a surge in its third-quarter profit, the retailer reported Thursday.

Net income in the quarter ended May 9 rose to $306 million, up nearly 46% from $210 million in the year-earlier third quarter. Sales rose 12% to $17.39 billion. Same-store sales rose 4%.

Costco said its dramatic profit increase was attributed to continued overseas demand from Canada to Taiwan and by better sales of nonessential products such as apparel and home furnishings.

At the end of the quarter, Costco ran 568 warehouse clubs, with locations in the United States; Canada; Mexico; the United Kingdom; Korea; Taiwan; Japan and Australia. The company said it plans to open five more locations by Aug. 29, the end of its fiscal year.

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Fred’s Q1 earnings ‘above guidance’ despite net income loss

BY Allison Cerra

MEMPHIS, Tenn. Despite posting a 4.2% loss in its net income for the quarter, Fred’s was optimistic about the future.

Although the retailer’s first-quarter net income dropped to $8.2 million from $8.6 million, earnings per diluted were flat at 21 cents. Fred’s total sales for the first quarter of fiscal 2010 increased 3% to $471.6 million, compared with $458.4 million for the same period last year. Comparable-store sales for the quarter increased 2.2% on top of a 2.8% increase in the first quarter last year. Additionally, Fred’s gross profit for the first quarter of 2010 increased 6% to $136.9 million from $129 million in the prior-year period.

Commenting on the results, Bruce Efird, CEO, said, “We are pleased to report earnings above guidance in the first quarter driven by better-than-expected comparable-store sales growth and a favorable sales mix, which together resulted in a 90-basis-point improvement in gross margins.”

Efird also added that Fred’s is looking to invest in prototype stores, as well as increasing marketing of five departments and implementing a new merchandising layout in 200 locations. For its pharmacy business, Fred’s CEO is confident it will become more lucrative.

“With the passage of the new healthcare bill, we see both opportunities and challenges, and remain committed to growing our pharmacy business – both organically and through acquisitions,” Efird said. “The team is confident that these efforts will translate into improved financial performance throughout the year and provide the catalyst for achieving Fred’s 2010 earnings goals.”

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Certificate Exchange Network gains popularity among retailers, suppliers

BY Allison Cerra

ALEXANDRIA, Va. More than ten major retailersv — boasting more than $150 billion in chain drug sales — have joined an online network developed by the National Association of Chain Drug Stores and RollStream to demonstrate compliance with the Consumer Product Safety Improvement Act of 2008.

NACDS and RollStream’s Certificate Exchange Network — which was introduced in late 2009 — follows document-sharing requirements regarding product safety testing certificates on certain consumer products. It is a way for manufacturers and retailers to connect and keep compliant with Consumer Product Safety Commission and CPSIA guidelines through a simple, easy-to-use browser interface in which retailer members can securely download product certificate needed to demonstrate CPSIA compliance within seconds.

“The Certificate Exchange Network can mean the difference between knowing where the most up-to-date certificates are located when they are needed, and not,” said Rick Cognetti, VP retail merchandising at Kinney Drugs. “So working with Kinney Drug trading partners in the network to avoid governmental fines makes perfect sense.”

“Ensuring compliance with all regulatory requirements, particularly those relating to product safety, is critical to our business,” said Nancy Secours, senior director of supply chain operations at Pfizer. “The zero-install and strong usability, of the NACDS-backed solution made selecting the CEN the logical choice for us.”

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