Costco's pre-tax profits have soared 52% to £25.8m in the year ending August 2008 as a result of better management of margins and expenses.

Profitability was also boosted by better working capital management, which helped the company save £747,000 in interest payments, according to accounts filed this week at Companies House.

"During the period, our gross margins improved despite pressure from significant competitor activities, rising commodity prices and the impact of a dismal summer," according to a directors' statement.

Turnover was up 6.2% to £1.27bn, helped by the opening of two warehouses during the period, and by increased sales of food, deli services and electronics, particularly televisions.

Costco had also increased sales to caterers with sales of fresh food performing well. "Continued focus on meat, bakery and produce has resulted in an increased share of sales in these departments," added the statement. Sales had also shown a "healthy improvement" in the quarter to November, thanks to promotional offers and the opening of its 21st warehouse, in Croydon.

Costco added that it was confident it could still open one or two depots a year provided it could negotiate planning consents from local authorities, and expand its UK estate to 50. The multiples were among the biggest threats to its business because they took trade from independent retailers, it said.

Topics