10-QPeriod: Q1 FY2024

COSTCO WHOLESALE CORP /NEW Quarterly Report for Q1 Ended Nov 26, 2023

Filed December 20, 2023For Securities:COST

Summary

Costco Wholesale Corporation reported strong performance for the 12 weeks ended November 26, 2023. Net sales increased by 6% to $56.7 billion, driven by a 4% rise in comparable sales and the opening of 25 new warehouses. Membership fee revenue saw a significant 8% increase, reflecting member growth and a higher renewal rate. The company demonstrated solid operational efficiency, with gross margin percentage improving by 43 basis points. This improvement was partly due to the absence of a significant one-time charge from the previous year related to discontinued charter shipping activities. Net income grew to $1.59 billion, or $3.58 per diluted share, up from $1.36 billion, or $3.07 per diluted share, in the prior year. This reflects robust sales, improved margins, and effective cost management. The company also announced a substantial special cash dividend of $15.00 per share, reinforcing its commitment to returning capital to shareholders. Despite increased SG&A expenses as a percentage of sales, primarily due to wage increases, Costco's overall financial health remains strong, supported by healthy operating cash flows and a substantial cash and investment balance.

Financial Highlights

49 data points
Beta

Revenue

$57.80B

12.7% Gross Margin

Net Income

$1.59B

2.7% Net Margin

EPS (Diluted)

$3.58

Total Assets

$73.72B

Cash & Equivalents

$17.01B

Free Cash Flow

$3.61B

Financial Statements
Beta
Revenue$57.80B
Cost of Revenue$50.46B
Gross Profit$7.34B
SG&A Expenses$5.36B
Operating Income$1.98B
Interest Expense$38.00M
Net Income$1.59B
EPS (Basic)$3.58
EPS (Diluted)$3.58
Shares Outstanding (Basic)443.83M
Shares Outstanding (Diluted)444.40M

Key Highlights

  • 1Net sales increased 6% to $56.7 billion, with comparable sales up 4% and 25 net new warehouses contributing to growth.
  • 2Membership fee revenue grew 8% to $1.08 billion, driven by member acquisition, Executive Membership upgrades, and strong renewal rates.
  • 3Gross margin percentage improved by 43 basis points, benefiting from warehouse operations, other businesses, and the absence of a prior year charge related to charter shipping activities.
  • 4Net income rose to $1.59 billion ($3.58 per diluted share) from $1.36 billion ($3.07 per diluted share) in the prior year period.
  • 5The company declared a significant special cash dividend of $15.00 per share, payable in January 2024, totaling approximately $6.7 billion.
  • 6Operating cash flow was strong, generating $4.65 billion, and the company plans capital expenditures of approximately $4.4 billion to $4.6 billion for fiscal 2024.
  • 7Cash and cash equivalents increased to $17.01 billion, providing ample liquidity for operations and future investments.

Frequently Asked Questions

Costco's revenue growth was primarily driven by a 4% increase in comparable sales and the sales generated by 25 net new warehouses opened since the end of the prior year's first quarter. Core merchandise categories, particularly fresh foods and foods and sundries, showed strong performance.

While Selling, General, and Administrative (SG&A) expenses increased as a percentage of net sales by 25 basis points, largely due to wage increases, the company's gross margin percentage improved by 43 basis points. This improvement in gross margin, coupled with the overall sales growth, helped to offset the increase in SG&A and contributed to higher net income.

Investors can expect continued capital returns. In addition to a regular quarterly cash dividend of $1.02 per share, Costco declared a substantial special cash dividend of $15.00 per share, totaling approximately $6.7 billion, payable in January 2024. The company also continues its share repurchase program, with $3.4 billion remaining under its authorization.

Costco's financial position remains very strong. The company generated $4.65 billion in cash from operations during the quarter, and its cash and cash equivalents stood at $17.01 billion as of November 26, 2023, providing ample liquidity for ongoing operations, capital expenditures, and shareholder returns.