Is Costco's sales growth coming from existing stores or new ones?

Growth is primarily driven by comparable sales, which rose 5.2% total company (7.1% adjusted for gasoline and FX). U.S. comps were 5.2%, Canada 5.8%, and Other International 4.7%. Comparable traffic grew 5.1%, while ticket rose 0.1%. New warehouse openings contribute additional growth but are not captured in comparable sales.

Why did operating cash flow decline so sharply?

Operating cash flow fell to $3.26 billion from $4.65 billion, mainly because working capital contributed $451 million versus $2.00 billion a year earlier. Inventory rose to $20.98 billion from $18.65 billion at fiscal year-end, and accounts payable also increased, so the change reflects timing of working-capital items rather than a change in net income, which rose.

What do the membership trends mean for Costco's long-term profitability?

Membership fees rose 7.8% to $1.17 billion, and the 90.4% worldwide renewal rate and 7.6% growth in paid members suggest a stable, recurring revenue base. Executive members, numbering 36.4 million and accounting for 73.1% of sales, are a key driver because they carry higher spending and additional rewards, which supports margin resilience.

Are there any risks investors should watch in this report?

Key watch items include rising capital expenditures ($1.26 billion, up from $1.04 billion), a higher inventory build, a $2.15 billion accumulated other comprehensive loss reflecting currency effects, and the reliance on gasoline and FX for reported comps. The forward-looking statements cite economic conditions, tariffs, wages, and energy costs as risk factors.

COST 8-K: Earnings & Results

Q: How did Costco's earnings perform compared with last year?

Net income rose to $1.798 billion, or $4.04 per diluted share, from $1.589 billion, or $3.58, a year earlier. Results include a $100 million ($0.22 per share) stock-based compensation tax benefit versus $44 million ($0.10) last year. Excluding these items, EPS grew 9.8% and net income grew 9.9%.

01—Abstract

Summary

Summary of the 8-K filed December 12, 2024. Cited figures are marked; the original filing is the authoritative source.

Costco Wholesale (COST) reported first quarter fiscal 2025 results (twelve weeks ended November 24, 2024) with net sales up 7.5% to $60.99 billion^a from $56.72 billion, and total revenue of $62.15 billion including membership fees of $1.166 billion (up 7.8%).

Net income rose to $1.798 billion^b, or $4.04 per diluted share, versus $1.589 billion, or $3.58, a year earlier. Results include a $100 million ($0.22 per share) stock-based compensation tax benefit, compared with a $44 million ($0.10 per share) benefit last year. Excluding these items, net income and diluted EPS growth were 9.9% and 9.8%, respectively.

Operating income grew 10.7% to $2.196 billion^c, and gross margin improved 24 basis points to 11.28% (7 basis points excluding gasoline effects), while SG&A was 9.59% of net sales, down 14 basis points. Comparable sales were strong across regions: total company comparable sales rose 5.2% (7.1% adjusted for gasoline prices and FX), with U.S. at 5.2%, Canada at 5.8%, and Other International at 4.7%. E-commerce comparable sales grew 13.0% (13.2% adjusted), driven by 16% site traffic growth.

Membership metrics remained healthy, with a 90.4% worldwide renewal rate, 92.8% U.S./Canada renewal rate, 77.4 million paid memberships (up 7.6%), and 36.4 million executive members accounting for 73.1% of sales. Balance-sheet and cash-flow trends warrant monitoring. Operating cash flow fell to $3.26 billion^d from $4.65 billion, largely due to a smaller working-capital contribution, while capital expenditures rose to $1.26 billion from $1.04 billion.

Merchandise inventories increased 12.5% sequentially to $20.98 billion, and accounts payable rose to $21.79 billion. Cash dividend payments dropped to $515 million from $905 million year over year, reflecting the timing of the prior-year special dividend. The company ended the quarter with 897 warehouses, and it expects 20 more openings in the rest of fiscal 2025, ending at an estimated 916 warehouses.

02—Key points

Key Highlights

Net sales increased 7.5% to $60.99 billion; total revenue reached $62.15 billion, including membership fees growing 7.8% to $1.17 billion.
Diluted EPS of $4.04 versus $3.58 a year ago (up 12.8%); excluding stock-based compensation tax benefits in both years, EPS growth was 9.8%.
Total company comparable sales rose 5.2% (7.1% adjusted for gasoline and FX), with e-commerce comparable sales up 13.0% and site traffic up 16%.
Gross margin expanded 24 basis points to 11.28%, while SG&A improved 14 basis points to 9.59% of net sales.
Paid memberships reached 77.4 million (up 7.6%), with a 90.4% worldwide renewal rate and 36.4 million executive members.
Operating cash flow declined to $3.26 billion from $4.65 billion, and capital expenditures increased to $1.26 billion, reducing free cash flow.
The company operates 897 warehouses and projects 916 by fiscal year-end 2025, with the Napa, California and Zaragoza, Spain openings already completed in Q1.

03—Questions

Frequently Asked Questions

How did Costco's earnings perform compared with last year?
Net income rose to $1.798 billion, or $4.04 per diluted share, from $1.589 billion, or $3.58, a year earlier. Results include a $100 million ($0.22 per share) stock-based compensation tax benefit versus $44 million ($0.10) last year. Excluding these items, EPS grew 9.8% and net income grew 9.9%.
Is Costco's sales growth coming from existing stores or new ones?
Growth is primarily driven by comparable sales, which rose 5.2% total company (7.1% adjusted for gasoline and FX). U.S. comps were 5.2%, Canada 5.8%, and Other International 4.7%. Comparable traffic grew 5.1%, while ticket rose 0.1%. New warehouse openings contribute additional growth but are not captured in comparable sales.
Why did operating cash flow decline so sharply?
Operating cash flow fell to $3.26 billion from $4.65 billion, mainly because working capital contributed $451 million versus $2.00 billion a year earlier. Inventory rose to $20.98 billion from $18.65 billion at fiscal year-end, and accounts payable also increased, so the change reflects timing of working-capital items rather than a change in net income, which rose.
What do the membership trends mean for Costco's long-term profitability?
Membership fees rose 7.8% to $1.17 billion, and the 90.4% worldwide renewal rate and 7.6% growth in paid members suggest a stable, recurring revenue base. Executive members, numbering 36.4 million and accounting for 73.1% of sales, are a key driver because they carry higher spending and additional rewards, which supports margin resilience.
Are there any risks investors should watch in this report?
Key watch items include rising capital expenditures ($1.26 billion, up from $1.04 billion), a higher inventory build, a $2.15 billion accumulated other comprehensive loss reflecting currency effects, and the reliance on gasoline and FX for reported comps. The forward-looking statements cite economic conditions, tariffs, wages, and energy costs as risk factors.

04—Continue

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