01—Abstract
Summary
Summary of the 10-K filed October 16, 2008. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation's 2008 10-K filing reveals a strong fiscal year with robust sales growth and continued expansion.
Net sales increased by 12.5% to $70.98 billiona, driven by an 8% increase in comparable warehouse sales and the opening of 24 net new warehouses. Membership fees saw a significant rise of 14.7% to $1.51 billion, bolstered by new member sign-ups and increased adoption of the higher-tier Executive Membership program. The company's operational efficiency is highlighted by a slight improvement in gross margin and a reduction in selling, general, and administrative (SG&A) expenses as a percentage of net sales.
Financially, net income grew by 18.5% to $1.28 billionb, or $2.89 per diluted share. The company also continued its commitment to shareholder returns through a 10% increase in its quarterly cash dividend and significant share repurchases totaling $886.9 million.
Despite some investment-related impairments due to market volatility, the company's liquidity remains strong, with substantial cash and cash equivalents. The report also details ongoing legal proceedings, primarily related to labor and employment practices, which the company believes will not have a material adverse effect on its financial position.
02—Key points
Key Highlights
- Net sales grew 12.5% to $70.98 billion, with comparable warehouse sales increasing by 8%.
- Membership fees increased by 14.7% to $1.51 billion, driven by membership growth and Executive Membership penetration.
- Net income rose 18.5% to $1.28 billion, or $2.89 per diluted share.
- The company repurchased approximately $886.9 million of its common stock during the fiscal year.
- The quarterly cash dividend was increased by 10% from $0.145 to $0.16 per share.
- Costco opened 24 net new warehouses, expanding its total footprint to 512 locations.
- Selling, general, and administrative expenses as a percentage of net sales decreased by 14 basis points.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Costco Wholesale Corp kept $0.02.
- Revenue$72.48B100.0%
- Cost of revenue−$63.50B87.6%
- Gross profit$8.98B12.4%
- Operating costs−$7.01B9.7%
- Operating income$1.97B2.7%
- Interest, other & tax−$686.0M0.9%
- Net income$1.28B1.8%
Where FY2008 revenue went
$72.48B- Cost of revenue: $63.50B, 88% of revenue
- Net income: $1.28B, 1.8% of revenue
- SG&A: $6.95B, 9.6% of revenue
- Interest, other & tax: $686.0M, 0.9% of revenue
Kept 1.8% as net incomeNet income $1.28B · 1.8%Interest, other & tax $686.0M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed October 16, 2008Financial Statements
| Revenue | $72.48B |
| Cost of Revenue | $63.50B |
| Gross Profit | $8.98B |
| SG&A Expenses | $6.95B |
| Operating Income | $1.97B |
| Interest Expense | $103.00M |
| Net Income | $1.28B |
| Shares Outstanding (Basic) | 434.44M |
| Shares Outstanding (Diluted) | 444.24M |
05—Questions
Frequently Asked Questions
How did Costco's sales perform in fiscal year 2008?
Costco reported a 12.5% increase in net sales for fiscal year 2008, reaching $70.98 billion. This growth was driven by an 8% increase in comparable warehouse sales and the opening of 24 net new warehouses.
What is the trend in Costco's membership fees?
Membership fees increased by 14.7% to $1.51 billion in fiscal year 2008. This growth is attributed to new membership sign-ups at newly opened warehouses and an increasing penetration rate of the higher-fee Executive Membership program.
How is Costco returning capital to shareholders?
Costco is returning capital to shareholders through an increased quarterly cash dividend, which was raised by 10% to $0.16 per share. Additionally, the company repurchased approximately $886.9 million worth of its common stock during the fiscal year.
What are the key risks highlighted in the filing?
The filing identifies several key risks, including intense competition from other retailers, general economic factors affecting consumer spending, the ability to find suitable locations for new warehouses, reliance on vendors for timely supply of quality merchandise, and the potential impact of foreign operations. Consumer trends and maintaining brand recognition are also noted as critical factors.
06—Continue