Summary
Costco Wholesale Corporation (COST) reported its fiscal third-quarter 2015 results ending May 10, 2015. The company demonstrated resilience with a modest increase in net sales by 1% to $25.5 billion, driven by new warehouse openings, although comparable warehouse sales saw a slight decrease of 1%. This was partially offset by a 4% rise in membership fees to $584 million, indicating continued member loyalty and growth in higher-tier memberships. Net income attributable to Costco increased by 9% to $516 million, translating to diluted earnings per share of $1.17, up from $1.07 in the prior year. The company successfully managed its cost structure, with gross margin percentage improving by 47 basis points, benefiting from a LIFO adjustment and improved ancillary business margins. However, Selling, General, and Administrative (SG&A) expenses as a percentage of net sales increased by 25 basis points, primarily due to investments in IT systems. Financially, Costco utilized cash flow for significant dividend payments, including a special dividend, and share repurchases. The company also issued $1 billion in Senior Notes, with plans for continued capital expenditures, primarily for warehouse expansion. Management expressed confidence in the company's liquidity and ability to meet future capital requirements.
Financial Highlights
48 data points| Revenue | $26.10B |
| Cost of Revenue | $22.69B |
| Gross Profit | $3.41B |
| SG&A Expenses | $2.58B |
| Operating Income | $821.00M |
| Interest Expense | $31.00M |
| Net Income | $516.00M |
| EPS (Basic) | $1.17 |
| EPS (Diluted) | $1.17 |
| Shares Outstanding (Basic) | 440.07M |
| Shares Outstanding (Diluted) | 443.13M |
Key Highlights
- 1Net income attributable to Costco increased by 9% to $516 million for the third quarter of fiscal 2015.
- 2Diluted earnings per share rose to $1.17, up from $1.07 in the prior year's third quarter.
- 3Total revenue increased by 1% to $26.1 billion in the third quarter, driven by a 1% growth in Net Sales to $25.5 billion and a 4% increase in Membership Fees to $584 million.
- 4Comparable warehouse sales decreased by 1% in the third quarter, influenced by lower gasoline prices and foreign currency fluctuations, but were up 6% excluding these factors.
- 5Gross margin percentage improved by 47 basis points year-over-year, aided by a LIFO benefit and better performance in ancillary businesses.
- 6The company paid a substantial special cash dividend of $5.00 per share ($2.36 billion total) during the period, alongside its regular quarterly dividend.
- 7Costco issued $1 billion in Senior Notes and plans approximately $2.4 to $2.5 billion in capital expenditures for fiscal 2015, primarily for new warehouse openings.