Summary
Costco Wholesale Corporation's (COST) Form 10-Q for the quarter ended November 25, 2012, demonstrates a strong financial performance characterized by robust sales growth and increased profitability. Net sales surged by 9.6% year-over-year, driven by a healthy 7% increase in comparable warehouse sales and contributions from new store openings. The company also saw a significant 14.4% rise in membership fees, indicating strong member loyalty and the positive impact of recent membership fee adjustments. Profitability improved as well, with net income attributable to Costco increasing by 30% to $416 million, or $0.95 per diluted share. This was supported by a slight improvement in gross margin and selling, general, and administrative (SG&A) expenses as a percentage of net sales. The company maintained a strong liquidity position, with total assets growing and robust operating cash flows, allowing for continued investment in expansion and a significant special cash dividend declared shortly after the quarter's end.
Financial Highlights
46 data points| Revenue | $23.71B |
| Cost of Revenue | $20.73B |
| Gross Profit | $2.99B |
| SG&A Expenses | $2.33B |
| Operating Income | $639.00M |
| Interest Expense | $13.00M |
| Net Income | $416.00M |
| EPS (Basic) | $0.96 |
| EPS (Diluted) | $0.95 |
| Shares Outstanding (Basic) | 433.42M |
| Shares Outstanding (Diluted) | 438.64M |
Key Highlights
- 1Net sales increased by 9.6% to $23.2 billion, driven by comparable sales growth of 7% and 25 new warehouse openings.
- 2Membership fees increased by 14.4% to $511 million, reflecting higher membership fees and strong renewal rates (89.7% in US/Canada).
- 3Net income attributable to Costco grew by 30% to $416 million, resulting in diluted EPS of $0.95, up from $0.73 in the prior year period.
- 4Gross margin improved slightly to 10.68% of net sales, benefiting from improved ancillary businesses like gasoline, despite slight pressure in core merchandise categories.
- 5Selling, general, and administrative expenses as a percentage of net sales improved by 7 basis points, primarily due to leverage from sales growth and a one-time benefit from a prior year alcohol law initiative.
- 6The company generated strong operating cash flow of $1.1 billion, supporting capital expenditures and financing activities.
- 7Subsequent to the quarter, Costco declared a substantial special cash dividend of $7.00 per share, amounting to approximately $3.05 billion, funded partly by a significant Senior Notes issuance.