Warehouse club retailer Costco Wholesale Corp reported a higher-than-expected quarterly profit as it benefited from paying lower fees to credit card partner Visa Inc and shoppers spent more on appliances, electronics and hardware.

The lower payments helped offset falling prices of grocery and fresh food in the quarter, Chief Financial Officer Richard Galanti said on a post-earnings call.

Margins at grocery retailers have taken a hit due to lower prices and companies such as Wal-Mart Stores Inc and Dollar General Corp further cutting prices to win market share.

Costco completed the switch to Visa from American Express Co during the fourth quarter.

The retailer is also likely to have benefited from higher fees from new credit card sign-ups, Deutsche Bank analyst Paul Trussell wrote in a pre-earnings note.

Consumer spending in the United states rose 4.3 per cent in the fourth quarter, according to data released by the Commerce Department on Thursday.

The bump in spending is likely to have helped Costco, which mainly caters to high-income customers.

Net income rose to US$779 million, or US$1.77 per share, in the fourth quarter ended Aug. 28, from US$767 million, or US$1.73 per share, a year earlier.

Analysts on average had expected earnings of US$1.73 per share, according to Thomson Reuters.

The retailer reported a 2 per cent rise in quarterly sales to US$35.73 billion.

For the fourth quarter, it also reported a 1 per cent drop in sales at U.S. stores open more than a year. Excluding the impact of fuel and currency fluctuations, sales at U.S. comparable stores rose 2 per cent.

Shares of the company rose 2.1 per cent after the bell. Up to Thursday's close, the stock had fallen 8.7 per cent compared to a 15.4 per cent rise in Wal-Mart's shares.