Summary
Costco Wholesale Corporation's 2004 10-K report indicates a strong financial performance with a 13.1% increase in net sales, reaching $47.1 billion. 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 million, 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.
Key Highlights
- 1Net sales grew by 13.1% to $47.1 billion, driven by comparable sales increases of 10% and 20 new warehouse openings.
- 2Membership fees increased by 12.7% to $961.3 million, reflecting strong member retention and growth in the Executive Membership program.
- 3Net income rose 22.4% to $882.4 million, with diluted EPS reaching $1.85.
- 4Costco declared and paid its first quarterly cash dividends in fiscal year 2004, initiating a return of capital to shareholders.
- 5Gross margin improved slightly to 10.72% of net sales, supported by merchandise and ancillary department performance.
- 6Selling, general, and administrative expenses as a percentage of net sales decreased to 9.75%, benefiting from expense leverage and healthcare plan changes.
- 7The company plans to open approximately 40 new warehouses in fiscal year 2005, continuing its strategic expansion.