Summary
Costco Wholesale Corporation (COST) reported its first quarter fiscal year 2012 results for the period ending November 20, 2011. The company demonstrated solid top-line growth, with net sales increasing by 12.5% year-over-year to $21.18 billion. This growth was primarily driven by a strong 10% increase in comparable warehouse sales and contributions from newly opened locations. Membership fees also saw a healthy increase of 7.6% to $447 million, reflecting increased penetration of the Executive Membership program and new sign-ups. Despite the revenue growth, net income saw a more modest increase of 2.6% to $320 million, resulting in diluted earnings per share (EPS) of $0.73, up from $0.71 in the prior year's quarter. The company's profitability was impacted by several factors, including a decrease in gross margin as a percentage of net sales, largely due to the higher sales penetration of the lower-margin gasoline business. Additionally, higher selling, general, and administrative (SG&A) expenses, influenced by contributions to a local initiative and increased stock-based compensation, also affected the bottom line. The company also incurred discrete tax expenses related to an audit in its Mexico joint venture and nondeductible expenses for political contributions.
Financial Highlights
47 data points| Revenue | $21.63B |
| Cost of Revenue | $18.93B |
| Gross Profit | $2.70B |
| SG&A Expenses | $2.14B |
| Operating Income | $543.00M |
| Interest Expense | $27.00M |
| Net Income | $320.00M |
| EPS (Basic) | $0.74 |
| EPS (Diluted) | $0.73 |
| Shares Outstanding (Basic) | 434.22M |
| Shares Outstanding (Diluted) | 440.62M |
Key Highlights
- 1Net sales grew 12.5% to $21.18 billion, driven by a 10% increase in comparable warehouse sales and new store openings.
- 2Membership fees increased by 7.6% to $447 million, boosted by higher Executive Membership penetration.
- 3Diluted EPS rose to $0.73 from $0.71 in the prior year's quarter, reflecting a 2.6% increase in net income to $320 million.
- 4Gross margin as a percentage of net sales declined by 35 basis points, primarily due to the higher sales contribution from the gasoline business.
- 5Selling, general, and administrative (SG&A) expenses as a percentage of net sales improved by 18 basis points, though specific charges impacted the quarter.
- 6The company repurchased approximately $173 million of its common stock during the quarter.
- 7Costco announced an increase in annual membership fees for U.S. and Canada members, effective for new members in November 2011 and renewals in January 2012.