Summary
Costco Wholesale Corporation's 2017 10-K filing highlights a year of consistent growth, with net sales reaching $126.2 billion, an increase of 9% year-over-year. This growth was primarily driven by a 4% increase in comparable sales, the opening of new warehouses (26 net new in 2017), and the benefit of an extra week in the fiscal year. Membership fee revenue also saw a robust 8% increase, signaling strong member loyalty and the positive impact of recent membership fee adjustments in the U.S. and Canada. The company continued its international expansion, with a notable increase in warehouses in Canada and other international markets. While gross margin percentage saw a slight decrease, this was largely attributed to the impact of gasoline prices and changes in sales mix. Importantly, selling, general, and administrative (SG&A) expenses as a percentage of net sales decreased, benefiting from improved terms in the U.S. co-branded credit card arrangement. Net income saw a significant 14% increase to $2.68 billion, or $6.08 per diluted share, reflecting operational efficiencies and a favorable tax benefit. Costco also demonstrated a commitment to returning capital to shareholders through dividends, including a substantial special cash dividend, and ongoing share repurchase programs.
Financial Highlights
50 data points| Revenue | $129.03B |
| Cost of Revenue | $111.88B |
| Gross Profit | $17.14B |
| SG&A Expenses | $12.95B |
| Operating Income | $4.11B |
| Interest Expense | $134.00M |
| Net Income | $2.68B |
| EPS (Basic) | $6.11 |
| EPS (Diluted) | $6.08 |
| Shares Outstanding (Basic) | 438.44M |
| Shares Outstanding (Diluted) | 440.94M |
Key Highlights
- 1Net sales grew by 9% to $126.2 billion in fiscal year 2017, driven by comparable sales growth of 4% and the addition of 26 net new warehouses.
- 2Membership fee revenue increased by 8% to $2.85 billion, bolstered by fee increases in the U.S. and Canada and strong renewal rates (90% in U.S./Canada, 87% worldwide).
- 3Net income rose 14% to $2.68 billion, resulting in diluted earnings per share of $6.08, up from $5.33 in the prior year.
- 4The company paid a special cash dividend of $7.00 per share in May 2017 and increased its quarterly dividend to $0.50 per share.
- 5SG&A expenses as a percentage of net sales decreased by 14 basis points, primarily due to favorable changes in the U.S. co-branded credit card arrangement.
- 6Costco continued its global expansion, operating 741 warehouses worldwide at the end of fiscal 2017, with plans for further growth in fiscal 2018.
- 7The company reported strong operational execution, with efforts to manage costs and leverage economies of scale, particularly through its membership model and private-label Kirkland Signature brand.