COSTCO WHOLESALE CORP /NEW Quarterly Report for Q3 Ended May 9, 2010

Summary

Costco Wholesale Corporation (COST) reported strong financial results for the third quarter of fiscal year 2010, ending May 9, 2010. The company demonstrated robust sales growth, with net sales increasing by 12.3% year-over-year, driven by a 10% increase in comparable sales and contributions from new warehouse openings. Membership fees also saw a significant rise of 20.1%, indicating strong member retention and growth, particularly in the Executive Membership program. Profitability improved substantially, with net income attributable to Costco surging by 45.8% to $306 million, leading to a diluted EPS of $0.68, up from $0.48 in the prior year period. This performance was supported by effective cost management, with Selling, General, and Administrative (SG&A) expenses decreasing as a percentage of net sales. The company also continued its commitment to shareholder returns, increasing its quarterly cash dividend by 13.9% on an annualized basis. Costco's balance sheet remains strong, with solid cash flows from operations.

Key Highlights

• 1Net sales increased by 12.3% to $17.385 billion, driven by a 10% increase in comparable sales.
• 2Membership fees grew by 20.1% to $395 million, reflecting strong member growth and retention, especially in the Executive Membership program.
• 3Net income attributable to Costco increased significantly by 45.8% to $306 million.
• 4Diluted Earnings Per Share (EPS) rose to $0.68 from $0.48 in the prior year's third quarter.
• 5Selling, General, and Administrative (SG&A) expenses decreased as a percentage of net sales by 40 basis points, indicating effective cost control.
• 6The company declared a quarterly cash dividend of $0.205 per share, an increase of 13.9% on an annualized basis.
• 7Cash and cash equivalents and short-term investments totaled $5.267 billion, providing ample liquidity.

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