01—Abstract
Summary
Summary of the 10-Q filed December 19, 2024. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 billionb invested in capital expenditures during the quarter and a plan to spend approximately $5 billion for the full fiscal year, supporting its expansion efforts.
02—Key points
Key Highlights
- Total revenue increased 8% year-over-year to $62.15 billion, driven by strong net sales growth.
- Net sales grew 8% to $60.99 billion, supported by comparable sales increases and new warehouse openings.
- Membership fees rose 8% to $1.17 billion, indicating sustained member loyalty and the benefit of recent fee increases.
- Diluted earnings per share (EPS) increased to $4.04 from $3.58 in the prior year's comparable quarter.
- Gross margin percentage improved by 24 basis points year-over-year, indicating better cost management and sales mix.
- The 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.
- Cash flow from operations was $3.26 billion, though lower than the prior year, due to increased investment in merchandise inventories.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Costco Wholesale Corp kept $0.03.
- Revenue$62.15B100.0%
- Cost of revenue−$54.11B87.1%
- Gross profit$8.04B12.9%
- Operating costs−$5.85B9.4%
- Operating income$2.20B3.5%
- Interest, other & tax−$398.0M0.6%
- Net income$1.80B2.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed December 19, 2024Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $62.15B$57.80B | +7.5% |
| Cost of Revenue | $54.11B$50.46B | +7.2% |
| Gross Profit | $8.04B$7.34B | +9.5% |
| SG&A Expenses | $5.85B$5.36B | +9.1% |
| Operating Income | $2.20B$1.98B | +10.7% |
| Interest Expense | $37.00M$38.00M | −2.6% |
| Net Income | $1.80B$1.59B | +13.2% |
| EPS (Basic) | $4.05$3.58 | +13.1% |
| EPS (Diluted) | $4.04$3.58 | +12.8% |
| Shares Outstanding (Basic) | 443.99M443.83M | 0.0% |
| Shares Outstanding (Diluted) | 444.89M444.40M | +0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Costco's revenue growth in the first quarter of fiscal 2025?
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.
How did membership fees contribute to the company's performance?
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.
What is the outlook for capital expenditures and store expansion?
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.
How did the company manage its expenses during the quarter?
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.
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