01—Abstract
Summary
Summary of the 10-Q filed March 13, 2025. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation reported solid financial results for the second quarter and first half of fiscal year 2025, demonstrating continued top-line growth and operational efficiency.
Net sales saw a healthy increase of 9%a for the quarter, driven by comparable sales growth and the addition of new warehouses. Membership fee revenue also grew by 7%, reflecting successful member acquisition and the impact of recent fee increases in the U.S. and Canada. Profitability metrics showed improvement, with a slight increase in gross margin percentage and a decrease in selling, general, and administrative (SG&A) expenses as a percentage of net sales.
Diluted earnings per share rose to $4.02b for the quarter, up from $3.92 in the prior year. The company also maintained a strong liquidity position, with significant cash and cash equivalents, and continued to return capital to shareholders through dividends and share repurchases. Management remains focused on its core strategy of offering value to members while navigating economic conditions and competition.
02—Key points
Key Highlights
- Net sales increased by 9% to $62.53 billion in the second quarter of fiscal 2025, compared to $57.33 billion in the prior year, driven by comparable sales growth and new warehouse openings.
- Membership fee revenue grew by 7% to $1.19 billion for the quarter, benefiting from new member sign-ups and recent membership fee increases in the U.S. and Canada.
- Diluted earnings per share (EPS) increased to $4.02 for the quarter, up from $3.92 in the second quarter of fiscal 2024.
- Gross margin percentage saw a modest increase of 5 basis points to 10.85% for the quarter, supported by improved efficiencies.
- SG&A expenses as a percentage of net sales decreased by 8 basis points to 9.06% for the quarter, indicating effective cost management.
- The company generated $6.01 billion in net cash from operating activities for the first half of fiscal 2025, highlighting strong operational cash generation.
- Costco declared a quarterly cash dividend of $1.16 per share, continuing its practice of returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Costco Wholesale Corp kept $0.03.
- Revenue$63.72B100.0%
- Cost of revenue−$55.74B87.5%
- Gross profit$7.98B12.5%
- Operating costs−$5.66B8.9%
- Operating income$2.32B3.6%
- Interest, other & tax−$528.0M0.8%
- Net income$1.79B2.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed March 13, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $63.72B$58.44B | +9.0% |
| Cost of Revenue | $55.74B$51.14B | +9.0% |
| Gross Profit | $7.98B$7.30B | +9.3% |
| SG&A Expenses | $5.66B$5.24B | +8.1% |
| Operating Income | $2.32B$2.06B | +12.3% |
| Interest Expense | $36.00M$41.00M | −12.2% |
| Net Income | $1.79B$1.74B | +2.6% |
| EPS (Basic) | $4.03$3.93 | +2.5% |
| EPS (Diluted) | $4.02$3.92 | +2.6% |
| Shares Outstanding (Basic) | 443.98M443.89M | 0.0% |
| Shares Outstanding (Diluted) | 444.89M444.75M | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of Costco's net sales growth in the second quarter?
Costco's net sales growth of 9% in the second quarter of fiscal 2025 was primarily driven by an increase in comparable sales across its existing stores and the contribution from 23 net new warehouses opened since the end of the second quarter of fiscal 2024.
How did the recent membership fee increase impact revenue?
The membership fee increase, effective September 1, 2024, in the U.S. and Canada, contributed approximately 3% to Costco's membership fee revenue in the second quarter of fiscal 2025. Overall, membership fee revenue increased by 7% to $1.19 billion for the quarter.
What is the current status of Costco's share repurchase program?
Costco's Board of Directors authorized a $4,000 million share repurchase program that expires in January 2027. As of February 16, 2025, approximately $2,452 million remained available under this program. In the first half of fiscal 2025, the company repurchased 443,000 shares for approximately $413 million.
How is Costco managing its expenses relative to sales growth?
Costco demonstrated effective expense management, with selling, general, and administrative (SG&A) expenses decreasing by 8 basis points as a percentage of net sales in the second quarter. This indicates that sales growth is outpacing expense growth, leading to improved operational leverage.
06—Continue