SAN FRANCISCO/NEW YORK - Warehouse club operators Costco Wholesale Corp and BJ's Wholesale Club Inc posted quarterly earnings below Wall Street estimates, hurt by falling food prices.

Shares of Costco fell less than 1 percent, while BJ's dropped more than 5 percent. Meanwhile, close-out retailer Big Lots Inc , which specializes in sales of excess inventory, reported higher-than-expected earnings, sending its shares up more than 2 percent.

Costco, the No. 1 U.S. warehouse club operator, sought to win market share during the recession by cutting prices and delaying price increases.

While that strategy apparently helped it retain customers, the company has not improved its margins as quickly as Wall Street had hoped, said Robert W. Baird & Co analyst Peter Benedict.

Costco's gross margins improved by 26 basis points, Benedict said, while he had expected an increase of 37 basis points.

It's a very low-margin business, so a few basis points here and there can have an outsized effect on results, he said.

Costco also said February same-store sales rose 9 percent, including the impact of fuel prices and foreign exchange.

Excluding a charge for employee benefits, Costco earned 70 cents per share in the second quarter ended February 14. Analysts on average were expecting 72 cents, according to Thomson Reuters I/B/E/S.

Quarterly sales rose 11 percent to $18.36 billion, excluding membership fees, which rose 9 percent to $386 million. Same-store sales increased 9 percent.

Warehouse clubs charge customers an annual fee to shop in their stores and get discounts on items ranging from cartons of fresh fruit to flat-screen televisions.

Costco, Wal-Mart Stores Inc's Sam's Club and BJ's Wholesale have gained customers seeking low prices on necessities like groceries or toiletries in the economic downturn. But falling prices for food and electronics have pressured the clubs' results.

On its conference call, BJ's Wholesale said it continued to be significantly impacted by deflationary pressures, especially for perishable food.

While demand for discretionary merchandise is creeping along, Chief Executive Officer Laura Sen said, she has not seen any major turnaround in that area.

BJ's said net profit rose to $55.1 million, or $1.01 a share, in the fourth quarter ended on January 30 from $52.7 million, or 91 cents a share, a year earlier.

Excluding one-time items, it earned 95 cents a share, missing the analysts' average estimate by a penny.

Sales in the holiday quarter rose 9.4 percent to $2.74 billion, while same-store sales rose 4.6 percent, including fuel. February same-store sales rose 7.5 percent.

A calendar shift in the timing of the Super Bowl from January last year to February this year boosted merchandise comparable-club sales by 2 percentage points, BJ's said. However, the impact of severe winter storms more than offset that benefit.

For the first quarter, BJ's forecast earnings per share of 40 cents to 45 cents. Analysts on average expect 43 cents.

BIG LOTS BEATS; OPTIMISTIC ABOUT Q1

Big Lots said profit rose to $105.4 million, or $1.27 per share, in the fourth quarter ended on January 30 from $78.8 million, or 96 cents a share, a year earlier. The retailer also increased the size of its share repurchase program to $400 million.

Excluding one-time items, it earned $1.31 a share, beating the analysts' average estimate of $1.28.

On a conference call, Big Lots said customers responded well to its reward points scheme and that February sales benefited from a special event and a strong President's Day.

For the first quarter, the company expects earnings of 60 cents to 65 cents a share from continuing operations. Analysts were looking for 53 cents.

Big Lots shares rose 2.2 percent to $34.68 in morning trading. BJ's fell 5.4 percent to $34.51, while Costco was down 0.4 percent at $61.12.

(Reporting by Nicole Maestri and Dhanya Skariachan; Additional reporting by Nivedita Bhattacharjee; Editing by Michele Gershberg and John Wallace)

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