Costco

(COST) - Get Report

said July total sales and same-store sales rose from a year ago, but the company reduced its guidance for the fourth quarter and fiscal year, citing lower-than-expected gross margins and increasing employee health care and compensation expenses.

Net sales for July totaled $3.34 billion, the wholesale retailer said, an increase of 12% from a year ago. July same-store sales rose 8%.

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The company also said it now expects fourth-quarter earnings of 46 cents to 48 cents a share, down from its prior projection of 54 cents to 56 cents a share. For the fiscal year ending Aug. 31, Costco forecast a profit of $1.48 to $1.50 a share, below the previous outlook of $1.56 to $1.58.

Analysts polled by Thomson First Call are looking for Costco to earn 55 cents in the fourth quarter and $1.58 for the full year.

Costco reported earnings of 52 cents in the year-ago fourth quarter and $1.48 for fiscal 2002. The company will report its financial results Oct. 8.

The company said its outlook for fiscal 2004 and beyond remains positive. Costco expects sales and earnings to grow 8% to 10% in the coming fiscal year.