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Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal Year 2017, February Sales Results, and Plans for Membership Fee Increase

ISSAQUAH, Wash., March 02, 2017 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq:COST) today announced its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2017, ended February 12, 2017.

Net sales for the quarter increased six percent, to $29.13 billion from $27.57 billion last year. Net sales for the first half increased four percent, to $56.60 billion from $54.19 billion last year.

Comparable sales for the twelve-week and twenty-four-week periods were as follows:

    12 Weeks   24 Weeks
             
U.S.   3 %   2 %
Canada   8 %   6 %
Other International   -2 %   -1 %
         
Total Company   3 %   2 %

Comparable sales for these periods excluding the impacts from changes in gasoline prices and foreign exchange were as follows:

    12 Weeks   24 Weeks
             
U.S.    3 %   2 %
Canada   2 %   3 %
Other International   3 %   3 %
         
Total Company   3 %   2 %

Net income for the quarter was $515 million, or $1.17 per diluted share, compared to $546 million, or $1.24 per diluted share, last year.  Net income for the first half was $1.060 billion, or $2.41 per diluted share, compared to $1.026 billion, or $2.32 per diluted share, last year.

For the four-week reporting month of February, ended February 26, 2017, the Company reported net sales of $8.92 billion, an increase of eight percent from $8.28 billion during the similar four-week period last year. For the twenty-six week period ended February 26, 2017, net sales were $61.18 billion, an increase of five percent from $58.25 billion during the similar period last year.

Comparable sales for the four-week and twenty-six-week periods ended February 26, 2017 were as follows:

    4 Weeks   26 Weeks
             
U.S.   5 %   3 %
Canada   10 %   6 %
Other International   -2 %   -1 %
         
Total Company   4 %   3 %

Comparable sales for these periods excluding the impacts from changes in gasoline prices and foreign exchange were as follows:

    4 Weeks   26 Weeks
             
U.S.    2 %   2 %
Canada   2 %   3 %
Other International   -1 %   3 %
         
Total Company   2 %   2 %

The Company also announced that, effective June 1, 2017, it will increase annual membership fees by $5 for U.S. and Canada Goldstar (individual), Business, and Business add-on members (“Primary” Members). With this increase, all U.S. and Canada Goldstar, Business and Business add-on members will pay an annual fee of $60. Also effective June 1, annual fees for Executive Memberships in the U.S. and Canada will increase from $110 to $120 (Primary membership of $60, plus the Executive upgrade of $60), and the maximum annual 2% reward associated with the Executive Membership will increase from $750 to $1,000. The fee increases will impact around 35 million members, roughly half of them Executive Members.

Costco currently operates 728 warehouses, including 508 in the United States and Puerto Rico, 94 in Canada, 37 in Mexico, 28 in the United Kingdom, 25 in Japan, 13 in Korea, 13 in Taiwan, eight in Australia and two in Spain. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

A conference call to discuss these fiscal 2017 second quarter operating results and February sales results is scheduled for 2:00 p.m. (PT) on March 2, 2017, and is available via a webcast on www.costco.com (click on Investor Relations and “Play Webcast”).

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future.  Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (including health care costs), energy and certain commodities, geopolitical conditions, and other risks identified from time to time in the Company’s public statements and reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements, except as required by law.


COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
 
      12 Weeks Ended     24 Weeks Ended
      February 12,
2017
    February 14,
2016
    February 12,
2017
    February 14,
2016
REVENUE                        
   Net sales   $ 29,130     $ 27,567     $ 56,599     $ 54,194  
   Membership fees     636       603       1,266       1,196  
     Total revenue     29,766       28,170       57,865       55,390  
OPERATING EXPENSES                        
   Merchandise costs     25,927       24,469       50,215       48,090  
   Selling, general and administrative     2,980       2,835       5,920       5,641  
   Preopening expenses     15       10       37       36  
     Operating income     844       856       1,693       1,623  
OTHER INCOME (EXPENSE)                        
   Interest expense     (31 )     (31 )     (60 )     (64 )
   Interest income and other, net     (4 )     16       22       44  
INCOME BEFORE INCOME TAXES     809       841       1,655       1,603  
   Provision for income taxes     288       286       579       561  
   Net income including noncontrolling interests     521       555       1,076       1,042  
   Net income attributable to noncontrolling interests     (6 )     (9 )     (16 )     (16 )
NET INCOME ATTRIBUTABLE TO COSTCO   $ 515     $ 546     $ 1,060     $ 1,026  
                         
NET INCOME PER COMMON SHARE
ATTRIBUTABLE TO COSTCO:
                       
   Basic   $ 1.17     $ 1.24     $ 2.42     $ 2.34  
   Diluted   $ 1.17     $ 1.24     $ 2.41     $ 2.32  
                         
   Shares used in calculation: (000’s)                        
      Basic     439,127       439,648       438,567       438,990  
      Diluted     440,657       441,559       440,568       441,457  
                         
                         
                         
Cash dividends declared per common share   $ 0.45     $ 0.40     $ 0.90     $ 0.80  



COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
 
Subject to Reclassifications
 
  February 12,
2017
  August 28,
 2016
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $ 4,744     $ 3,379  
Short-term investments 1,221     1,350  
Receivables, net 1,597     1,252  
Merchandise inventories 9,530     8,969  
Other current assets 368     268  
    Total current assets 17,460     15,218  
PROPERTY AND EQUIPMENT      
Land 5,436     5,395  
Buildings and improvements 14,395     13,994  
Equipment and fixtures 6,363     6,077  
Construction in progress 697     701  
  26,891     26,167  
Less accumulated depreciation and amortization (9,549 )   (9,124 )
    Net property and equipment 17,342     17,043  
OTHER ASSETS 828     902  
    TOTAL ASSETS $ 35,630     $ 33,163  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 8,764     $ 7,612  
Current portion of long-term debt 2,257     1,100  
Accrued salaries and benefits 2,780     2,629  
Accrued member rewards 910     869  
Deferred membership fees 1,458     1,362  
Other current liabilities 2,691     2,003  
    Total current liabilities 18,860     15,575  
LONG-TERM DEBT, excluding current portion 2,815     4,061  
OTHER LIABILITIES 1,243     1,195  
    Total liabilities 22,918     20,831  
COMMITMENTS AND CONTINGENCIES      
EQUITY      
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding 0     0  
Common stock $.005 par value; 900,000,000 shares authorized; 438,941,000 and 437,524,000 shares issued and outstanding 2     2  
Additional paid-in capital 5,631     5,490  
Accumulated other comprehensive loss (1,333 )   (1,099 )
Retained earnings 8,140     7,686  
    Total Costco stockholders’ equity 12,440     12,079  
Noncontrolling interests 272     253  
    Total equity 12,712     12,332  
    TOTAL LIABILITIES AND EQUITY $ 35,630     $ 33,163  
Costco Wholesale Corporation
Richard Galanti, 425/313-8203
Bob Nelson, 425/313-8255
David Sherwood, 425/313-8239

Costco Wholesale Corp.