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COSTCO WHOLESALE CORP /NEW 8-K Report, Financial Results (May 30, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed May 30, 2024
Period End
May 30, 2024
Security
COST
In the record · 2016–202610-K1210-Q328-K130

COST filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 130 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Nov ’22Nov ’22
  2. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Costco reported third-quarter fiscal 2024 results (twelve weeks ended May 12, 2024) that showed strong top-line growth and meaningful profit expansion.

Net sales rose 9.1% to $57.39 billiona, and total revenue reached $58.52 billion, including $1.12 billion in membership fees (up 7.6%). Total company comparable sales grew 6.6% (6.5% excluding gasoline and FX), with U.S. comps at 6.2%, Canada at 7.7%, and Other International at 7.7%. E-commerce comparable sales grew 20.7%.

Operating income increased about 31% to $2.20 billion, and net income rose to $1.68 billionb, or $3.78 per diluted share, versus $2.93 a year earlier. Management noted that last year's quarter included a $298 million pretax charge (about $0.50 per share) tied to discontinuing charter shipping; excluding that item, net income and diluted EPS grew roughly 10%. Margin performance was a key driver.

Gross margin was 10.84%c, up 52 basis points year over year (54 bps excluding gasoline impacts), while SG&A was 8.96% of sales, up 15 bps. Membership indicators remained healthy, with 74.5 million paid memberships (up 7.8%), a 90.5% worldwide renewal rate, and a 93.0% U.S. and Canada renewal rate. Executive members represented 34.5 million of memberships and 73.1% of sales penetration.

For the first 36 weeks, net sales rose 7.0% to $171.44 billiond and net income reached $5.01 billion, or $11.27 per diluted share, compared with $9.30 last year. Balance sheet and cash flow highlights point to heavy capital deployment. Cash and equivalents declined to $10.4 billion from $13.7 billion at fiscal year-end 2023, largely reflecting $8.53 billion in cash dividend payments during the 36 weeks, while capital expenditures increased to $3.13 billion from $2.77 billion.

Total equity declined to $21.8 billion, mainly because retained earnings fell from $19.5 billion to $16.0 billion. Management also reported 878 warehouses currently in operation and projected approximately 890 by fiscal year-end 2024. This is an earnings and operating update rather than a guidance filing, so investors should focus on sustained comp growth, membership renewal, and margin trends.

02—Key points

Key Highlights

  1. Net sales up 9.1% to $57.39B in Q3 FY24; total revenue of $58.52B including membership fees of $1.12B (up 7.6%).
  2. Total company comparable sales of 6.6% (6.5% adjusted); U.S. 6.2%, Canada 7.7%, Other International 7.7%; e-commerce comparable sales up 20.7%.
  3. Q3 net income of $1.68B, or $3.78 per diluted share, versus $2.93 last year; excluding the prior-year $298M charge, EPS growth was about 10%.
  4. Gross margin expanded 52 bps to 10.84%, while SG&A rose 15 bps to 8.96% of sales, lifting operating income about 31% to $2.20B.
  5. Membership strength: 74.5M paid members (up 7.8%), 90.5% worldwide renewal rate, 93.0% U.S./Canada renewal rate, and 73.1% of sales from executive members.
  6. Year-to-date (36 weeks) net sales of $171.44B (up 7.0%) and net income of $5.01B, or $11.27 per diluted share.
  7. Cash fell to $10.4B from $13.7B at year-end FY23, driven by $8.53B in cash dividend payments; capex rose to $3.13B from $2.77B, and the company ended the quarter with 878 warehouses.

03—Questions

Frequently Asked Questions

  1. How strong was Costco's sales growth in the third quarter of fiscal 2024?

    Net sales grew 9.1% to $57.39 billion. The filing notes that the fiscal calendar shift, tied to last year's 53rd week, added roughly 0.5 to 1.0 percentage points to quarterly sales growth. Total company comparable sales grew 6.6%, or 6.5% excluding gasoline price and foreign exchange effects, indicating that underlying growth remained solid.

  2. Did profitability improve, and what affected the year-over-year comparison?

    Yes. Net income rose to $1.68 billion, or $3.78 per diluted share, from $2.93 a year earlier. The prior-year quarter included a $298 million pretax charge (about $0.50 per share) related to discontinuing charter shipping. Excluding that item, management reported net income and diluted EPS growth of about 10%. Gross margin also expanded 52 basis points to 10.84%.

  3. How healthy is Costco's membership base?

    Membership appears robust. Paid memberships reached 74.5 million (up 7.8%), total cardholders reached 133.9 million, and worldwide renewal was 90.5%, with 93.0% in the U.S. and Canada. Membership fee income grew 7.6%, and executive members accounted for 73.1% of sales, which supports the recurring-revenue model.

  4. Why did cash decline significantly during the first 36 weeks?

    Cash and equivalents fell to $10.4 billion from $13.7 billion, primarily because of $8.53 billion in cash dividend payments in financing activities. Operating cash flow of $8.38 billion and new long-term debt proceeds of $498 million partly offset that outflow, while capital expenditures rose to $3.13 billion. Retained earnings declined accordingly, from $19.5 billion to $16.0 billion.

04—Continue

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