Summary
Costco Wholesale Corporation's (COST) 10-Q filing for the quarter ending November 23, 2008, shows a modest increase in net sales to $16.036 billion, a 3.6% rise year-over-year, driven by new store openings and a slight increase in comparable store sales. Despite the challenging economic environment, the company demonstrated resilience with net income reaching $263 million, a slight increase from the prior year's $262 million, translating to diluted earnings per share of $0.60. Membership fees also saw a healthy increase of 6.1%, indicating strong member loyalty and continued growth in the higher-tier Executive Membership program. However, the company's cash flow from operations turned negative year-over-year, largely due to a significant increase in merchandise inventories. The balance sheet reflects a reduction in cash and cash equivalents and short-term investments, partly influenced by market uncertainties around certain investment funds. Management highlights that despite economic headwinds, Costco's business model positions it favorably compared to many retailers. The company continues its expansion strategy, with plans for new warehouse openings in fiscal year 2009, to be financed through operating cash flow and existing liquid assets.
Financial Highlights
26 data points| Revenue | $16.39B |
| Cost of Revenue | $14.28B |
| Gross Profit | $2.12B |
| SG&A Expenses | $1.68B |
| Operating Income | $422.00M |
| Interest Expense | $25.00M |
| Net Income | $263.00M |
| EPS (Basic) | $0.61 |
| EPS (Diluted) | $0.60 |
| Shares Outstanding (Basic) | 432.45M |
| Shares Outstanding (Diluted) | 440.53M |
Key Highlights
- 1Net sales increased by 3.6% to $16.036 billion, driven by 25 new warehouse openings and a 1% increase in comparable store sales.
- 2Membership fees grew by 6.1% to $359 million, reflecting strong member retention and increased uptake of the Executive Membership program.
- 3Net income rose slightly to $263 million from $262 million in the prior year period, with diluted EPS increasing to $0.60 from $0.59.
- 4Cash flow from operating activities was negative at $(39) million, a significant decrease from $271 million in the prior year, primarily due to a $268 million increase in merchandise inventories.
- 5The company repurchased 845,000 shares of common stock for $55 million during the quarter, with approximately $2.0 billion remaining under authorized repurchase programs.
- 6Certain investment funds experienced liquidity issues, leading to $6 million in other-than-temporary impairment losses recognized during the quarter.
- 7The company plans to continue its expansion strategy, with capital expenditures expected to be between $1.5 billion and $1.7 billion for fiscal year 2009.