As some apparel merchants struggle, Costco is finding greaterchoice of branded merchandise for its own stores, said Richard A.Galanti, executive VP and CFO. And a slowdown in store growth byother companies also may provide new locations.

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"Our nonfood buyers are seeing more availability in brandedjeans and women's apparel, and even on the home furnishings side,"Galanti said. "[And] we're seeing more [real estate] opportunitiesof late as some retailers have dropped out of sites and some tractsof land have flipped back to the bank."

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The company plans to open an additional 16 to 18 new warehouses(including relocating of four to five units) for a total of 28 netnew units at year-end.

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Net sales for the quarter increased 12% from the previous yearto $16.62 billion. Comparable-store sales rose 7% with a 5%increase in the US (boosted by higher gas prices) and 17%international rise. Net income was $327.9 million, compared with$249.5 million the previous year.

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Costco operates 534 warehouses in the United States, PuertoRico, Canada, the United Kingdom, Korea, Taiwan, Japan andMexico.

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