10-QPeriod: Q3 FY2024

COSTCO WHOLESALE CORP /NEW Quarterly Report for Q3 Ended May 12, 2024

Filed June 6, 2024For Securities:COST

Summary

Costco Wholesale Corporation (COST) reported strong financial results for the third quarter of fiscal year 2024, with net sales increasing by 9% to $57.4 billion. This growth was driven by a 7% increase in comparable sales and the addition of 24 new warehouses since the prior year. Membership fee revenue also saw a healthy 8% increase, reflecting solid member retention and upgrades to Executive Memberships. The company's commitment to providing value led to a gross margin increase of 52 basis points, partly due to the absence of a significant one-time charge from the prior year related to the discontinuation of charter shipping activities. Net income rose significantly to $1.68 billion, or $3.78 per diluted share, a substantial improvement from $1.30 billion, or $2.93 per diluted share, in the same quarter last year. This was bolstered by improved gross margins and a decrease in selling, general, and administrative expenses as a percentage of net sales. Despite a notable $6.7 billion special dividend paid out in January, the company maintained a strong operational cash flow of $8.4 billion for the year-to-date period, underscoring its financial resilience and ability to manage capital effectively.

Financial Highlights

50 data points
Beta

Revenue

$58.52B

12.5% Gross Margin

Net Income

$1.68B

2.9% Net Margin

EPS (Diluted)

$3.78

Total Assets

$67.91B

Cash & Equivalents

$10.40B

Free Cash Flow

$1.94B

Financial Statements
Beta
Revenue$58.52B
Cost of Revenue$51.17B
Gross Profit$7.34B
SG&A Expenses$5.14B
Operating Income$2.20B
Interest Expense$41.00M
Net Income$1.68B
EPS (Basic)$3.79
EPS (Diluted)$3.78
Shares Outstanding (Basic)443.89M
Shares Outstanding (Diluted)444.83M

Key Highlights

  • 1Net sales increased 9% to $57.4 billion for the third quarter, driven by comparable sales growth and new warehouse openings.
  • 2Membership fee revenue grew 8% to $1.12 billion, indicating strong member loyalty and growth.
  • 3Net income surged by 29% year-over-year to $1.68 billion ($3.78 per diluted share).
  • 4Gross margin percentage improved by 52 basis points, benefiting from operational efficiencies and the absence of a prior year charge.
  • 5Selling, general, and administrative expenses decreased as a percentage of net sales by 15 basis points, reflecting improved productivity.
  • 6The company declared and paid a quarterly cash dividend of $1.16 per share.
  • 7Year-to-date operating cash flow remained robust at $8.38 billion.

Frequently Asked Questions

Costco reported a 9% increase in net sales for the third quarter of fiscal year 2024, reaching $57.4 billion. This growth was attributed to a 7% increase in comparable sales and the opening of 24 new warehouses since the end of the third quarter of fiscal year 2023.

Membership fee revenue increased by 8% to $1.12 billion in the third quarter. This growth is a result of new member sign-ups and a higher rate of members upgrading to the Executive Membership, demonstrating strong member engagement and loyalty.

Costco's net income increased significantly by 29% to $1.68 billion in the third quarter of fiscal year 2024, translating to $3.78 per diluted share. This improvement was driven by a higher gross margin percentage, which increased by 52 basis points, and a decrease in selling, general, and administrative expenses as a percentage of net sales.

Costco declared and paid a quarterly cash dividend of $1.16 per share. The company also continues its share repurchase program, with $3.08 billion remaining under its $4 billion authorization. Notably, the company paid a substantial special dividend of $15.00 per share in January 2024, funded by its strong operational cash flow.