10-KPeriod: FY2022

COSTCO WHOLESALE CORP /NEW Annual Report, Year Ended Aug 28, 2022

Filed October 5, 2022For Securities:COST

Summary

Costco Wholesale Corporation's (COST) 2022 10-K filing showcases a strong year of growth, with net sales increasing by 16% to $222.7 billion, driven by a robust 14% increase in comparable sales and the opening of 26 new warehouses. Membership fee revenue also saw a healthy 9% rise, indicating continued member loyalty and growth. Despite inflationary pressures impacting merchandise costs, which led to a decrease in gross margin percentage, the company effectively managed selling, general, and administrative (SG&A) expenses, which decreased as a percentage of net sales. This efficiency, coupled with solid sales growth, resulted in a 17% increase in net income to $5.84 billion, or $13.14 per diluted share. The company continues to expand its global footprint, with strategic investments in new warehouses and e-commerce capabilities. Costco's business model, centered on offering low prices and high value to its members, remains a key differentiator in a competitive retail landscape. The report highlights the company's commitment to its employees, strategic expansion plans, and its resilience in navigating supply chain challenges and economic uncertainties. Investors can find reassurance in Costco's consistent sales growth, effective cost management, and strong membership base.

Financial Highlights

51 data points
Beta

Revenue

$226.95B

12.1% Gross Margin

Net Income

$5.84B

2.6% Net Margin

EPS (Diluted)

$13.14

Total Assets

$64.17B

Cash & Equivalents

$10.20B

Free Cash Flow

$3.50B

Financial Statements
Beta
Revenue$226.95B
Cost of Revenue$199.38B
Gross Profit$27.57B
SG&A Expenses$19.78B
Operating Income$7.79B
Interest Expense$158.00M
Net Income$5.84B
EPS (Basic)$13.17
EPS (Diluted)$13.14
Shares Outstanding (Basic)443.65M
Shares Outstanding (Diluted)444.76M

Key Highlights

  • 1Net sales grew 16% to $222.7 billion, driven by a 14% increase in comparable sales and new warehouse openings.
  • 2Membership fee revenue increased 9% to $4.22 billion, reflecting strong member retention and upgrades.
  • 3Despite increased merchandise costs due to inflation, SG&A expenses as a percentage of net sales decreased by 77 basis points due to sales leverage and operational efficiencies.
  • 4Net income rose 17% to $5.84 billion, or $13.14 per diluted share.
  • 5Costco opened 26 new warehouses globally, continuing its physical expansion strategy.
  • 6The company's strong membership renewal rates (93% in the U.S. and Canada, 90% worldwide) underscore customer loyalty.
  • 7E-commerce comparable sales increased by 10%, showing continued growth in digital channels.

Frequently Asked Questions

Costco's net sales increased by 16% to $222.7 billion in fiscal year 2022. This growth was primarily driven by a 14% increase in comparable sales and the contribution of sales from new warehouses opened during the year and in the previous year. Higher gasoline prices also positively impacted net sales.

Inflationary pressures, particularly on merchandise costs, led to a decrease in Costco's gross margin percentage by 65 basis points. This was partly due to a LIFO (Last-In, First-Out) charge for higher merchandise costs. However, the company was able to mitigate some of these impacts through effective management of Selling, General, and Administrative (SG&A) expenses, which decreased as a percentage of net sales by 77 basis points due to sales leverage and the cessation of incremental COVID-19 related wages. Supply chain constraints continued to impact certain merchandise categories.

Costco opened 26 new warehouses in fiscal year 2022 and plans to open approximately 29 additional new warehouses in fiscal year 2023. The company's e-commerce business also showed growth, with comparable sales increasing by 10% in 2022, indicating a continued focus on both physical and digital channels.

Costco's membership base remains a core strength. Membership fee revenue increased by 9% in fiscal year 2022. The company reported strong renewal rates of 93% in the U.S. and Canada and 90% worldwide at the end of 2022, indicating high member loyalty.