COSTCO GAINS GROUND TOUGH ECONOMY HELPS SPUR HIGHER SALES AT STORE CHAIN.

Byline: Barbara Correa Staff Writer

CANOGA PARK - A few steps into the Costco warehouse, David Chauncey, a West Hills retiree, had placed just one item in his cart: a jumbo-size container of red licorice.

A short time later, the cart would be much fuller. ``I never walk out of here without spending 150 bucks,'' he said Wednesday.

Chauncey buys all his film at Costco and likes to stock up on ribs, cheeses, cereal - even clothing.

``Their socks and shorts are a very good buy and they have a huge variety of jeans,'' he said. ``You go into a department store, you have to wander around to find it. Here, you see it, you buy it.''

``The only drawback,'' Chauncey said, ``is checking out and waiting in line.''

The urge to stockpile food, household supplies and cheap jeans, aided by an economic necessity to shop for bargains, helps explain how Costco Wholesale Corp. posted an 11 percent increase in sales for the third quarter, beating expectations and outpacing competitors.

Industry watchers say that's no surprise at a time when consumers are looking for deals.

``Consumers are very bargain-focused right now,'' said Britt Beemer, chairman of America's Research Group. ``In tougher times (Costco) has had some pretty solid sales. They're somewhat immune to the customer going elsewhere for a lower price point, because you can't go down in price point.''

At a time of generally slow growth for the retail sector, Costco's formula of low-priced merchandise geared toward the upscale shopper has continued to bring in customers.

The Issaquah, Wash.-based company posted an 18 percent rise in earnings on net income of $153.8 million, or 33 cents a share. Sales were $9.34 billion, up 11 percent from $8.44 billion in the previous quarter.

The results beat analysts' forecasts of 28 cents a share, as well as Costco's own projections, which were for earnings between 30 cents and 32 cents a share. Shares of Costco closed at $37.35, up $1.43 or 3.9 percent, on the Nasdaq exchange.

Costco's store sales, for stores open at least a year, increased 6 percent in the quarter from the same period last year, compared with a year-to-date increase of 2.3 percent for Wal-Mart's Sam's Club, its chief competitor in California,

``We try to economize,'' said Gerardo Cueva, an elementary school teacher in Winnetka who buys food in bulk at Costco, then divides it into portions at home for storage in a freezer.

``I really dislike having to go to the supermarket once a week,'' he said. ``Here, we come once a month.''

Convenience is key for Costco shoppers.

``I could watch and do the whole coupon thing, but I don't have the time,'' said Aleta Howland, a Girl Scout leader in Winnetka.

Still, there is a downside to buying in bulk.

``Costco's got everything,'' said Kathryn Romano of West Hills, who runs a scrapbooking business out of her home. ``Now it's just the matter of having the storage space.''

Barbara Correa, [phone]

barbara.correa(at)dailynews.com

CAPTION(S):

2 photos, box

Photo:

(1 -- color) Shawn Barghi, 21, of Woodland Hills packs groceries into his SUV after shopping Wednesday at Costco in Canoga Park.

(2 -- color) Kwang Ja Cha, left, and her husband, Baek Woon Cha, unload their purchases from shopping carts Wednesday at Costco in Canoga Park. The chain is outpacing its competitors.

John Lazar/Staff Photographer

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