CHRIS RAMEY
Denis Poroy  /  AP
Chris Ramey pumps gas at a Costco store in San Diego. The wholesale club operator said Friday it expects third-quarter and full-year earnings to miss estimates because of lower-than-expected gas sales.
updated 4/22/2005 11:22:38 AM ET 2005-04-22T15:22:38

Wholesale club operator Costco Wholesale Corp. said Friday it expects third-quarter and full-year earnings will be below Wall Street expectations, citing lower gross margins than expected due to gasoline sales. But the company increased its quarterly dividend 15 percent.

The company forecast third-quarter earnings of 41 cents to 43 cents a share, fourth-quarter earnings of 63 cents to 67 cents a share, and 2005 earnings of $1.98 to $2.04 a share, excluding items.

Costco said current Thomson Financial consensus analyst estimates for the third quarter and year were “at the high end of company expectations.”

Analysts are looking for the company to earn 46 cents a share in the third quarter, 70 cents a share in the fourth quarter, and $2.10 a share in the year.

“Despite satisfactory sales and membership results, and reasonably good expense control, our gross margins were lower than planned, principally from gasoline sales,” said Chief Financial Officer Richard Galanti in a statement.

Costco also said its board increased the quarterly cash dividend 15 percent, to 11.5 cents from 10 cents, payable May 27 to shareholders of record May 6.

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