Early Access

10-QPeriod: Q3 FY2020

COSTCO WHOLESALE CORP /NEW Quarterly Report for Q3 Ended May 10, 2020

Filed June 4, 2020For Securities:COST

Summary

Costco Wholesale Corporation's (COST) third quarter of fiscal year 2020, ending May 10, 2020, demonstrated resilience amidst the COVID-19 pandemic. The company reported a 7% increase in net sales to $36.45 billion, driven by a 5% comparable sales increase and the contribution of new warehouse openings. Membership fees also saw a 5% rise, underscoring the strength of the membership model. Despite an increase in gross margin percentage, operating income was impacted by higher SG&A expenses, largely due to incremental wage and sanitation costs related to the pandemic. Net income attributable to Costco for the quarter was $838 million, or $1.89 per diluted share, a decrease from the prior year's $906 million ($2.05 per diluted share). This decline was primarily attributed to the significant COVID-19 related expenses, which offset a non-recurring tax benefit recognized in the prior year. The company also proactively managed its capital structure by issuing $4 billion in Senior Notes and maintained a strong liquidity position, ending the quarter with substantial cash and short-term investments.

Financial Highlights

52 data points
Beta

Revenue

$37.27B

0.1% Gross Margin

Net Income

$838.00M

0.0% Net Margin

EPS (Diluted)

$1.89

Total Assets

$51.73B

Cash & Equivalents

$10.83B

Free Cash Flow

$1.20B

Financial Statements
Beta
Revenue$37.27B
Cost of Revenue$32.25B
Gross Profit$5.02B
SG&A Expenses$3.83B
Operating Income$1.18B
Interest Expense$37.00M
Net Income$838.00M
EPS (Basic)$1.90
EPS (Diluted)$1.89
Shares Outstanding (Basic)442.32M
Shares Outstanding (Diluted)443.86M

Key Highlights

  • 1Net sales increased by 7% to $36.45 billion for the third quarter, supported by a 5% increase in comparable sales and the opening of 15 new warehouses.
  • 2Membership fees grew by 5% to $815 million, indicating continued member loyalty and acquisition.
  • 3Gross margin percentage improved by 54 basis points, driven by core merchandise and ancillary businesses, though partially offset by COVID-19 related costs.
  • 4Selling, General, and Administrative (SG&A) expenses as a percentage of net sales increased by 59 basis points, primarily due to incremental wage and sanitation costs related to COVID-19.
  • 5Diluted EPS decreased to $1.89 from $2.05 year-over-year, largely due to COVID-19 expenses and a prior year tax benefit.
  • 6The company acquired Innovel Solutions in March 2020, enhancing its capabilities for final mile delivery of large products.
  • 7Costco issued $4 billion in Senior Notes in April 2020 to strengthen its liquidity position.

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