01—Abstract
Summary
Summary of the 10-K filed November 12, 2004. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation's 2004 10-K report indicates a strong financial performance with a 13.1% increase in net sales, reaching $47.1 billiona.
This growth was driven by a comparable warehouse sales increase of 10% and the successful opening of 20 new warehouses. Membership fees also saw a healthy rise of 12.7%, attributed to new member acquisitions, increased penetration of the Executive Membership program, and high renewal rates. The company achieved net income growth of 22.4%, totaling $882.4 millionb, or $1.85 per diluted share.
This financial strength allowed Costco to initiate its first quarterly cash dividend in fiscal year 2004, signaling a commitment to returning value to shareholders. The company also demonstrated effective cost management, with improvements in gross margin and a reduction in selling, general, and administrative expenses as a percentage of net sales. Expansion remains a key focus, with plans for approximately 40 new warehouses in fiscal year 2005 across the U.S., Canada, and international markets.
02—Key points
Key Highlights
- Net sales grew by 13.1% to $47.1 billion, driven by comparable sales increases of 10% and 20 new warehouse openings.
- Membership fees increased by 12.7% to $961.3 million, reflecting strong member retention and growth in the Executive Membership program.
- Net income rose 22.4% to $882.4 million, with diluted EPS reaching $1.85.
- Costco declared and paid its first quarterly cash dividends in fiscal year 2004, initiating a return of capital to shareholders.
- Gross margin improved slightly to 10.72% of net sales, supported by merchandise and ancillary department performance.
- Selling, general, and administrative expenses as a percentage of net sales decreased to 9.75%, benefiting from expense leverage and healthcare plan changes.
- The company plans to open approximately 40 new warehouses in fiscal year 2005, continuing its strategic expansion.
03—Questions
Frequently Asked Questions
What was Costco's revenue growth in fiscal year 2004?
Costco reported a 13.1% increase in net sales for fiscal year 2004, reaching $47.1 billion. This growth was fueled by comparable warehouse sales growth of 10% and the addition of 20 new warehouses.
Did Costco pay any dividends in fiscal year 2004?
Yes, for the first time, Costco's Board of Directors declared and paid two quarterly cash dividends of $0.10 per share each in fiscal year 2004, demonstrating a new capital return policy to shareholders.
What is the outlook for warehouse expansion?
Costco plans to continue its expansion strategy in fiscal year 2005, with an intention to open approximately 40 new warehouse clubs in the United States and Canada, and an additional 5 international warehouses in the UK, Taiwan, and Japan. Costco Mexico also plans to open 2-3 new clubs.
How did Costco manage its expenses in fiscal year 2004?
Costco effectively managed its expenses, with selling, general, and administrative (SG&A) expenses decreasing to 9.75% of net sales, an improvement of eight basis points. This was largely due to increased expense leverage from higher sales, changes in healthcare plans, and stable workers' compensation costs.
04—Continue