10-KPeriod: FY2021

COSTCO WHOLESALE CORP /NEW Annual Report, Year Ended Aug 29, 2021

Filed October 6, 2021For Securities:COST

Summary

Costco Wholesale Corporation (COST) reported strong performance for the fiscal year ending August 29, 2021, characterized by robust net sales growth of 18% to $192.05 billion. This increase was driven by a solid 16% rise in comparable sales and contributions from newly opened warehouses. Membership fee revenue also saw a healthy increase of 9%, reflecting continued member loyalty and upgrades to the premium Executive membership. The company effectively managed expenses, with Selling, General, and Administrative (SG&A) costs decreasing as a percentage of net sales by 40 basis points, attributed to sales leverage and reduced COVID-19 related wage expenses. Despite a slight decrease in gross margin percentage by seven basis points, largely due to a shift in sales mix towards ancillary services, overall profitability improved significantly. Net income grew by 25% to $5.007 billion, with diluted earnings per share rising to $11.27. Costco continued its strategic expansion, opening 22 new warehouses during the fiscal year, and demonstrated a commitment to shareholder returns through special and quarterly cash dividends, alongside an active share repurchase program. The company also noted ongoing impacts from supply chain constraints due to the COVID-19 pandemic but maintained a positive outlook on liquidity and capital resources.

Financial Highlights

51 data points
Beta

Revenue

$195.93B

12.9% Gross Margin

Net Income

$5.01B

2.6% Net Margin

EPS (Diluted)

$11.27

Total Assets

$59.27B

Cash & Equivalents

$11.26B

Free Cash Flow

$5.37B

Financial Statements
Beta
Revenue$195.93B
Cost of Revenue$170.68B
Gross Profit$25.25B
SG&A Expenses$18.54B
Operating Income$6.71B
Interest Expense$171.00M
Net Income$5.01B
EPS (Basic)$11.30
EPS (Diluted)$11.27
Shares Outstanding (Basic)443.09M
Shares Outstanding (Diluted)444.35M

Key Highlights

  • 1Net sales increased by 18% to $192.05 billion for fiscal year 2021.
  • 2Comparable sales grew by 16%, indicating strong underlying business performance.
  • 3Membership fee revenue rose by 9%, highlighting member retention and growth.
  • 4Net income increased by 25% to $5.007 billion, with diluted EPS of $11.27.
  • 5SG&A expenses as a percentage of net sales decreased by 40 basis points.
  • 6The company opened 22 new warehouses, continuing its expansion strategy.
  • 7Costco returned capital to shareholders through $5.748 billion in dividends and share repurchases.

Frequently Asked Questions

Costco's net sales increased by 18% in fiscal year 2021, primarily driven by a 16% increase in comparable sales and the addition of sales from new warehouses opened in 2020 and 2021. Strong performance was noted across all core merchandise categories, with particular strength in non-foods, as well as warehouse ancillary and other businesses like e-commerce and gasoline.

Costco effectively managed its expenses, with Selling, General, and Administrative (SG&A) expenses decreasing by 40 basis points as a percentage of net sales. This improvement was due to leveraging increased sales, reduced incremental wages related to COVID-19, and other operational efficiencies.

Costco's growth strategy remains focused on opening new warehouses, with 22 new locations opened in fiscal year 2021 and plans for further expansion. The company also aims to grow its membership base, increase the penetration of its Executive membership, and enhance its e-commerce offerings. Maintaining competitive pricing and high-quality merchandise, including its private-label Kirkland Signature brand, is central to its strategy.

Key financial highlights include an 18% increase in net sales to $192.05 billion, a 16% rise in comparable sales, a 9% increase in membership fee revenue, and a 25% growth in net income to $5.007 billion, resulting in diluted earnings per share of $11.27. The company also saw a reduction in SG&A expenses as a percentage of sales.