10-QPeriod: Q1 FY2025

COSTCO WHOLESALE CORP /NEW Quarterly Report for Q1 Ended Nov 24, 2024

Filed December 19, 2024For Securities:COST

Summary

Costco Wholesale Corporation (COST) reported solid financial results for the first quarter of fiscal year 2025, ending November 24, 2024. Total revenue increased by 8% to $62.15 billion, driven by a robust 8% rise in net sales to $60.99 billion, supported by comparable sales growth and contributions from new warehouse openings. Membership fee revenue also saw an 8% increase, reaching $1.17 billion, reflecting strong member loyalty and the impact of recent fee adjustments. Profitability showed a significant improvement, with net income rising to $1.80 billion, or $4.04 per diluted share, compared to $1.59 billion, or $3.58 per diluted share, in the prior year's quarter. This growth was bolstered by a higher gross margin percentage, which improved by 24 basis points, and well-managed selling, general, and administrative (SG&A) expenses, which increased only slightly as a percentage of net sales. The company continues its strategic capital allocation, with $1.26 billion invested in capital expenditures during the quarter and a plan to spend approximately $5 billion for the full fiscal year, supporting its expansion efforts.

Financial Highlights

48 data points
Beta

Revenue

$62.15B

12.9% Gross Margin

Net Income

$1.80B

2.9% Net Margin

EPS (Diluted)

$4.04

Total Assets

$73.39B

Cash & Equivalents

$10.91B

Free Cash Flow

$2.00B

Financial Statements
Beta
Revenue$62.15B
Cost of Revenue$54.11B
Gross Profit$8.04B
SG&A Expenses$5.85B
Operating Income$2.20B
Interest Expense$37.00M
Net Income$1.80B
EPS (Basic)$4.05
EPS (Diluted)$4.04
Shares Outstanding (Basic)443.99M
Shares Outstanding (Diluted)444.89M

Key Highlights

  • 1Total revenue increased 8% year-over-year to $62.15 billion, driven by strong net sales growth.
  • 2Net sales grew 8% to $60.99 billion, supported by comparable sales increases and new warehouse openings.
  • 3Membership fees rose 8% to $1.17 billion, indicating sustained member loyalty and the benefit of recent fee increases.
  • 4Diluted earnings per share (EPS) increased to $4.04 from $3.58 in the prior year's comparable quarter.
  • 5Gross margin percentage improved by 24 basis points year-over-year, indicating better cost management and sales mix.
  • 6The company invested $1.26 billion in capital expenditures during the quarter and plans approximately $5 billion for the full fiscal year, primarily for new warehouse development.
  • 7Cash flow from operations was $3.26 billion, though lower than the prior year, due to increased investment in merchandise inventories.

Frequently Asked Questions

The primary driver of Costco's revenue growth was an 8% increase in net sales, reaching $60.99 billion. This was supported by a 5% increase in comparable sales across the company and the sales generated from 26 net new warehouses opened since the prior year's first quarter.

Membership fees increased by 8% to $1.17 billion. This growth is attributed to new member acquisitions and a higher proportion of members upgrading to the Executive Membership. The recent increase in annual membership fees in the U.S. and Canada, effective September 1, 2024, had an immaterial impact in the first quarter due to revenue deferral but is expected to contribute more significantly in future periods.

Costco invested $1.26 billion in capital expenditures during the first quarter and plans to spend approximately $5 billion for the full fiscal year 2025. This investment will primarily fund the acquisition of land, buildings, and equipment for new and remodeled warehouses, information systems, and distribution facilities, supporting its ongoing expansion strategy.

Selling, general, and administrative (SG&A) expenses as a percentage of net sales increased slightly by 14 basis points to 9.59%. However, excluding the impact of gasoline price deflation, SG&A expenses as a percentage of net sales remained flat. The company benefited from lower preopening costs and stock compensation expense, though this was partially offset by increased wage costs and other operational expenses.