01—Abstract
Summary
Summary of the 10-K filed October 5, 2022. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation's (COST) 2022 10-K filing showcases a strong year of growth, with net sales increasing by 16% to $222.7 billiona, 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 billionb, 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.
02—Key points
Key Highlights
- Net sales grew 16% to $222.7 billion, driven by a 14% increase in comparable sales and new warehouse openings.
- Membership fee revenue increased 9% to $4.22 billion, reflecting strong member retention and upgrades.
- Despite 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.
- Net income rose 17% to $5.84 billion, or $13.14 per diluted share.
- Costco opened 26 new warehouses globally, continuing its physical expansion strategy.
- The company's strong membership renewal rates (93% in the U.S. and Canada, 90% worldwide) underscore customer loyalty.
- E-commerce comparable sales increased by 10%, showing continued growth in digital channels.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Costco Wholesale Corp kept $0.03.
- Revenue$226.95B100.0%
- Cost of revenue−$199.38B87.9%
- Gross profit$27.57B12.1%
- Operating costs−$19.78B8.7%
- Operating income$7.79B3.4%
- Interest, other & tax−$1.95B0.9%
- Net income$5.84B2.6%
Where FY2022 revenue went
$226.95B- Cost of revenue: $199.38B, 88% of revenue
- Net income: $5.84B, 2.6% of revenue
- SG&A: $19.78B, 8.7% of revenue
- Interest, other & tax: $1.95B, 0.9% of revenue
Kept 2.6% as net incomeNet income $5.84B · 2.6%Interest, other & tax $1.95B · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed October 5, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $226.95B$195.93B | +15.8% |
| Cost of Revenue | $199.38B$170.68B | +16.8% |
| Gross Profit | $27.57B$25.25B | +9.2% |
| SG&A Expenses | $19.78B$18.54B | +6.7% |
| Operating Income | $7.79B$6.71B | +16.2% |
| Interest Expense | $158.00M$171.00M | −7.6% |
| Net Income | $5.84B$5.01B | +16.7% |
| EPS (Basic) | $13.17$11.30 | +16.5% |
| EPS (Diluted) | $13.14$11.27 | +16.6% |
| Shares Outstanding (Basic) | 443.65M443.09M | +0.1% |
| Shares Outstanding (Diluted) | 444.76M444.35M | +0.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Costco's net sales growth in fiscal year 2022?
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.
How did inflation and supply chain issues affect Costco's profitability?
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.
What is the outlook for warehouse expansion and e-commerce growth?
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.
How strong is Costco's membership base, and what are the renewal rates?
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.
06—Continue