Summary
Costco Wholesale Corporation reported solid financial results for the second quarter and first half of fiscal year 2020, ending February 16, 2020. Total revenue saw a healthy increase, driven by robust comparable sales growth across all segments. Net income also rose, reflecting the company's ability to leverage sales growth and manage expenses effectively. The company's strong membership model continues to be a key driver of profitability, with membership fee revenue showing consistent growth and high renewal rates. Management highlighted effective cost control measures and strategic investments, such as the new poultry processing plant, which are expected to support long-term profitability despite some short-term impacts. Costco also continued its strategic capital allocation through dividends and share repurchases, signaling confidence in its financial health and future prospects.
Financial Highlights
49 data points| Revenue | $39.07B |
| Cost of Revenue | $34.06B |
| Gross Profit | $5.02B |
| SG&A Expenses | $3.74B |
| Operating Income | $1.27B |
| Interest Expense | $34.00M |
| Net Income | $931.00M |
| EPS (Basic) | $2.10 |
| EPS (Diluted) | $2.10 |
| Shares Outstanding (Basic) | 442.02M |
| Shares Outstanding (Diluted) | 443.73M |
Key Highlights
- 1Total revenue increased by 10% to $38.3 billion for the 12 weeks ended February 16, 2020, driven by a 9% comparable sales increase.
- 2Net income attributable to Costco rose by 5% to $931 million ($2.10 per diluted share) for the 12-week period, compared to $889 million ($2.01 per diluted share) in the prior year.
- 3Membership fee revenue increased by 6% to $816 million for the quarter, supported by strong member renewal rates (91% in the U.S. and Canada, 88% worldwide).
- 4Gross margin percentage decreased by 31 basis points to 10.98%, primarily due to a shift in sales towards lower-margin ancillary businesses and initial operating losses from a new poultry processing plant.
- 5Selling, General, and Administrative (SG&A) expenses as a percentage of net sales decreased by 22 basis points to 9.78%, indicating improved operational leverage.
- 6The company declared a quarterly cash dividend of $0.65 per share, an increase from $0.57 in the prior year's second quarter.
- 7Capital expenditures were $1.26 billion in the first half of fiscal 2020, with plans to spend approximately $3.0 billion for the full fiscal year, including opening 15 additional new warehouses.