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COSTCO WHOLESALE CORP /NEW Annual Report, Year Ended Aug 28, 2005

Filing Date
Filed November 10, 2005
Period End
August 28, 2005
Security
COST
In the record · 2016–202610-K1210-Q328-K130

COST filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 130 current reports (8-K) between 2016 and 2026.

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01—Abstract

Summary

Summary of the 10-K filed November 10, 2005. Cited figures are marked; the original filing is the authoritative source.

Costco Wholesale Corporation's 2005 10-K report highlights a year of robust growth and financial strength.

The company achieved a 10% increase in net sales, reaching $51.86 billiona, driven by a 7% rise in comparable warehouse sales and the addition of 16 new warehouses. Membership fees also saw a healthy 11.6% increase, underscoring strong member loyalty and program penetration. Financially, net income grew by a significant 20.5% to $1.06 billion, or $2.18 per diluted share.

This growth was achieved despite a slight decrease in gross margin percentage, which was attributed to a shift in sales mix towards lower-margin items like gasoline and increased costs associated with the Executive Membership program. The company also demonstrated a commitment to shareholder returns through a quarterly cash dividend increase and a substantial share repurchase program, signaling confidence in its financial stability and future prospects.

02—Key points

Key Highlights

  1. Net sales increased by 10.0% to $51.86 billion for fiscal year 2005.
  2. Comparable warehouse sales increased by 7%, indicating strong organic growth.
  3. Net income grew by 20.5% to $1.06 billion, resulting in diluted earnings per share of $2.18.
  4. Membership fees increased by 11.6% to $1.07 billion, reflecting strong member retention and program uptake.
  5. The company repurchased approximately $413 million worth of its common stock during fiscal year 2005.
  6. Costco's Board of Directors increased the quarterly cash dividend from $0.10 to $0.115 per share.
  7. The company operated 433 warehouse clubs across the United States, Canada, the United Kingdom, Korea, Taiwan, and Japan by the end of fiscal year 2005.

03—Questions

Frequently Asked Questions

  1. What was Costco's revenue growth in fiscal year 2005?

    Costco reported a 10.0% increase in net sales, reaching $51.86 billion for the fiscal year ended August 28, 2005.

  2. How did the Executive Membership program impact profitability?

    The increased penetration of the Executive Membership program had a slight negative impact on gross margin as a percentage of net sales, reducing it by 10 basis points due to associated costs and reward redemptions. However, it also contributed to higher membership fee revenue.

  3. What is Costco's strategy for managing inventory and costs?

    Costco's strategy relies on high sales volume and rapid inventory turnover, coupled with volume purchasing, efficient distribution, and no-frills warehouse operations. They aim to offer members very low prices by operating at significantly lower gross margins than traditional retailers.

  4. Did Costco engage in share repurchases during fiscal year 2005?

    Yes, during the fourth quarter of fiscal year 2005, Costco repurchased approximately $413 million worth of its common stock under its $500 million share repurchase program. The company also authorized an additional $1 billion repurchase program subsequent to year-end.

04—Continue

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