01—Abstract
Summary
Summary of the 10-Q filed June 6, 2024. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
This growth was driven by a 7%b 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 billionc, 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.
02—Key points
Key Highlights
- Net sales increased 9% to $57.4 billion for the third quarter, driven by comparable sales growth and new warehouse openings.
- Membership fee revenue grew 8% to $1.12 billion, indicating strong member loyalty and growth.
- Net income surged by 29% year-over-year to $1.68 billion ($3.78 per diluted share).
- Gross margin percentage improved by 52 basis points, benefiting from operational efficiencies and the absence of a prior year charge.
- Selling, general, and administrative expenses decreased as a percentage of net sales by 15 basis points, reflecting improved productivity.
- The company declared and paid a quarterly cash dividend of $1.16 per share.
- Year-to-date operating cash flow remained robust at $8.38 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Costco Wholesale Corp kept $0.03.
- Revenue$58.52B100.0%
- Cost of revenue−$51.17B87.5%
- Gross profit$7.34B12.5%
- Operating costs−$5.14B8.8%
- Operating income$2.20B3.8%
- Interest, other & tax−$516.0M0.9%
- Net income$1.68B2.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed June 6, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $58.52B$53.65B | +9.1% |
| Cost of Revenue | $51.17B$47.17B | +8.5% |
| Gross Profit | $7.34B$6.47B | +13.4% |
| SG&A Expenses | $5.14B$4.79B | +7.3% |
| Operating Income | $2.20B$1.68B | +30.9% |
| Interest Expense | $41.00M$36.00M | +13.9% |
| Net Income | $1.68B$1.30B | +29.1% |
| EPS (Basic) | $3.79$2.94 | +28.9% |
| EPS (Diluted) | $3.78$2.93 | +29.0% |
| Shares Outstanding (Basic) | 443.89M443.81M | 0.0% |
| Shares Outstanding (Diluted) | 444.83M444.36M | +0.1% |
05—Questions
Frequently Asked Questions
How did Costco's net sales perform in the third quarter of fiscal year 2024?
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.
What is the trend in Costco's membership fees?
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.
How has Costco's profitability changed year-over-year?
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.
What is Costco's approach to capital allocation, particularly regarding dividends and share repurchases?
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.
06—Continue