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Costco Wholesale Corporation Reports First Quarter Fiscal Year 2018 Operating Results

ISSAQUAH, Wash., Dec. 14, 2017 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq:COST) today announced its operating results for the first quarter (twelve weeks) of fiscal 2018, ended November 26, 2017.

Net sales for the first quarter were $31.12 billion, an increase of 13.3 percent from $27.47 billion during the first quarter last year.

While this year’s twelve-week first quarter included one less sales day in the U.S. than the first quarter last year (due to the shift of the Thanksgiving holiday this year), pre-Thanksgiving and Black Friday/Holiday weekend sales fell into the first quarter this year compared to the second quarter last year. Combined, these factors produced an estimated net benefit of approximately 1.5% in the U.S., and slightly less worldwide.

Comparable sales for the first quarter fiscal 2018 were as follows:

 
    12 Weeks    12 Weeks  
                                w/o gas inflation & FX   
           
U.S.   10.3%   8.7%  
Canada   11.3%   4.3%  
Other International   10.1%   8.2%  
           
Total Company   10.5%   7.9%  
           
E-commerce   43.5%   42.1%  
           

Reported net income for the quarter was $640 million, or $1.45 per diluted share, compared to $545 million, or $1.24 per diluted share, last year. This year’s first quarter benefited from a $41 million ($0.09 per diluted share) tax benefit related to a change in accounting rules for stock-based compensation. Last year’s first quarter benefited from a non-recurring $51 million ($0.07 per diluted share after tax) legal settlement.

Costco currently operates 746 warehouses, including 518 in the United States and Puerto Rico, 98 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland and one in France. Costco also operates e-commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, December 14, 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 the Company does not undertake to update these statements, except as required by law.

CONTACTS: Costco Wholesale Corporation
Richard Galanti, 425/313-8203
Bob Nelson, 425/313-8255
David Sherwood, 425/313-8239


COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (dollars in millions, except per share data)
(unaudited)

 
      November 26,
2017
    November 20,
2016
 
REVENUE              
  Net sales   $ 31,117     $ 27,469    
  Membership fees     692       630    
  Total revenue     31,809       28,099    
OPERATING EXPENSES              
  Merchandise costs     27,617       24,288    
  Selling, general and administrative     3,224       2,940    
  Preopening expenses     17       22    
  Operating income     951       849    
OTHER INCOME (EXPENSE)              
  Interest expense     (37 )     (29 )  
  Interest income and other, net     22       26    
INCOME BEFORE INCOME TAXES     936       846    
  Provision for income taxes     285       291    
  Net income including noncontrolling interests     651       555    
  Net income attributable to noncontrolling interests     (11 )     (10 )  
NET INCOME ATTRIBUTABLE TO COSTCO   $ 640     $ 545    
               
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:              
  Basic   $ 1.46     $ 1.24    
  Diluted   $ 1.45     $ 1.24    
               
Shares used in calculation: (000’s)              
  Basic     437,965       438,007    
  Diluted     440,851       440,525    
               
               
               
Cash dividends declared per common share   $ 0.50     $ 0.45    
               

                                   

       
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (amounts in millions, except par value and share data)
(unaudited)
       
Subject to Reclassifications
       
  November 26,
 2017
  September 3,
 2017
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $ 5,689     $ 4,546  
Short-term investments 1,196     1,233  
Receivables, net 1,559     1,432  
Merchandise inventories 11,213     9,834  
Other current assets 240     272  
Total current assets 19,897     17,317  
PROPERTY AND EQUIPMENT      
Land 5,915     5,690  
Buildings and improvements 15,523     15,127  
Equipment and fixtures 6,859     6,681  
Construction in progress 812     843  
  29,109     28,341  
Less accumulated depreciation and amortization (10,427 )   (10,180 )
Net property and equipment 18,682     18,161  
OTHER ASSETS 799     869  
TOTAL ASSETS $ 39,378     $ 36,347  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 11,992     $ 9,608  
Accrued salaries and benefits 2,791     2,703  
Accrued member rewards 973     961  
Deferred membership fees 1,590     1,498  
Other current liabilities 3,014     2,725  
Total current liabilities 20,360     17,495  
LONG-TERM DEBT, excluding current portion 6,478     6,573  
OTHER LIABILITIES 1,184     1,200  
Total liabilities 28,022     25,268  
COMMITMENTS AND CONTINGENCIES      
EQUITY      
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares
   issued and outstanding
0     0  
Common stock $.01 par value; 900,000,000 shares authorized;
   439,185,000 and 437,204,000 shares issued and outstanding
4     4  
Additional paid-in capital 5,811     5,800  
Accumulated other comprehensive loss (1,037 )   (1,014 )
Retained earnings 6,300     5,988  
Total Costco stockholders’ equity 11,078     10,778  
Noncontrolling interests 278     301  
Total equity 11,356     11,079  
TOTAL LIABILITIES AND EQUITY $ 39,378     $ 36,347  
               

 

Costco Wholesale Corporation