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March 5, 2020 at 4:15 PM EST

Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal 2020 and February Sales Results

ISSAQUAH, Wash., March 05, 2020 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the second quarter (twelve weeks) and the first 24 weeks of fiscal 2020, ended February 16, 2020.

Net sales for the quarter increased 10.5 percent, to $38.26 billion from $34.63 billion last year. Net sales for the first 24 weeks increased 8.1 percent, to $74.49 billion from $68.94 billion last year.

Comparable sales for the second quarter fiscal 2020 were as follows:

    12 Weeks   12 Weeks   24 Weeks   24 Weeks  
        Adjusted*       Adjusted*  
  U.S. 9.1%   8.1%   7.0%   6.6%  
  Canada 8.9%   6.8%   5.8%   5.9%  
  Other International 7.9%   7.1%   5.5%   5.8%  
                   
  Total Company 8.9%   7.9%   6.6%   6.5%  
                   
  E-commerce 28.4%   28.0%   17.4%   17.3%  
                   
  *Excluding the impacts from changes in gasoline prices and foreign exchange.  

Due to Thanksgiving occurring a week later this year, for the quarter: total and comparable sales were positively impacted by approximately one-half percent; and e-commerce sales were positively impacted by an estimated 11 percentage points.

Reported net income for the quarter was $931 million, or $2.10 per diluted share, compared to $889 million, or $2.01 per diluted share, last year. Net income for the first 24 weeks was $1.77 billion, or $4.00 per diluted share, compared to $1.66 billion, or $3.74 per diluted share, last year.

For the four-week reporting month of February, ended March 1, 2020, the Company reported net sales of $12.20 billion, an increase of 13.8 percent from $10.72 billion last year. For the twenty-six week period ended March 1, 2020, net sales were $80.76 billion, an increase of 8.5 percent from $74.42 billion last year.

Comparable sales for the February and year-to-date periods ended March 1, 2020, were as follows:

    4 Weeks   4 Weeks   26 Weeks   26 Weeks  
        Adjusted*       Adjusted*  
  U.S. 12.4%   11.6%   7.5%   7.1%  
  Canada 10.2%   10.4%   6.2%   6.3%  
  Other International 12.5%   13.5%   6.1%   6.5%  
                   
  Total Company 12.1%   11.7%   7.2%   7.0%  
                   
  E-commerce 22.6%   22.7%   17.9%   17.9%  
     
     
  *Excluding the impacts from changes in gasoline prices and foreign exchange.  

February sales benefited from an uptick in consumer demand in the fourth week of the reporting period. We attribute this to concerns over the Coronavirus and estimate the positive impact on total and comparable sales to be approximately three percent.

Costco currently operates 785 warehouses, including 546 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.

A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, March 5, 2020, and is available via a webcast on www.costco.com (click on Investor Relations and “Play Webcast”).

Certain statements contained in this document and the pre-recorded telephone message 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. In some cases forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. 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 (generally including health care costs), energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, global disease threats, 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
  Josh Dahmen, 425/313-8254

 

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

       
  12 Weeks Ended   24 Weeks Ended
  February 16, 2020   February 17, 2019   February 16, 2020   February 17, 2019
REVENUE              
Net sales $ 38,256     $ 34,628     $ 74,492     $ 68,939  
Membership fees   816     768     1,620     1,526  
Total revenue $ 39,072     35,396     76,112     70,465  
OPERATING EXPENSES              
Merchandise costs   34,056     30,720     66,289     61,343  
Selling, general and administrative   3,743     3,464     7,475     6,939  
Preopening expenses   7     9     21     31  
Operating income   1,266     1,203     2,327     2,152  
OTHER INCOME (EXPENSE)              
Interest expense   (34 )   (34 )   (72 )   (70 )
Interest income and other, net   45     46     80     68  
INCOME BEFORE INCOME TAXES   1,277     1,215     2,335     2,150  
Provision for income taxes   330     314     532     472  
Net income including noncontrolling interests   947     901     1,803     1,678  
Net income attributable to noncontrolling interests   (16 )   (12 )   (28 )   (22 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 931     $ 889     $ 1,775     $ 1,656  
               
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:              
Basic $ 2.10     $ 2.02     $ 4.02     $ 3.77  
Diluted $ 2.10     $ 2.01     $ 4.00     $ 3.74  
               
Shares used in calculation (000’s):              
Basic   442,021     440,284     441,920     439,721  
Diluted   443,727     442,337     443,704     442,535  
               

                                

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (amounts in millions, except par value and share data) (unaudited)

       
Subject to Reclassifications  February 16, 2020   September 1, 2019
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $ 7,786     $ 8,384  
Short-term investments 929     1,060  
Receivables, net 1,988     1,535  
Merchandise inventories 11,850     11,395  
Other current assets 1,150     1,111  
Total current assets 23,703     23,485  
PROPERTY AND EQUIPMENT      
Land 6,696     6,417  
Buildings and improvements 17,853     17,136  
Equipment and fixtures 8,406     7,801  
Construction in progress 906     1,272  
Accumulated depreciation and amortization (12,380 )   (11,736 )
Net property and equipment 21,481     20,890  
OTHER ASSETS      
Operating lease right-of-use assets 2,596      
Other long-term assets 1,002     1,025  
TOTAL ASSETS $ 48,782     $ 45,400  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 11,072     $ 11,679  
Accrued salaries and benefits 3,415     3,176  
Accrued member rewards 1,243     1,180  
Deferred membership fees 1,865     1,711  
Current portion of long-term debt 500     1,699  
Other current liabilities 4,600     3,792  
Total current liabilities 22,695     23,237  
OTHER LIABILITIES      
Long-term debt, excluding current portion 5,099     5,124  
Long-term operating lease liabilities 2,446      
Other long-term liabilities 1,543     1,455  
TOTAL LIABILITIES 31,783     29,816  
COMMITMENTS AND CONTINGENCIES      
EQUITY      
Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding      
Common stock $0.01 par value; 900,000,000 shares authorized; 441,622,000 and 439,625,000 shares issued and outstanding 4     4  
Additional paid-in capital 6,506     6,417  
Accumulated other comprehensive loss (1,280 )   (1,436 )
Retained earnings 11,384     10,258  
Total Costco stockholders’ equity 16,614     15,243  
Noncontrolling interests 385     341  
TOTAL EQUITY 16,999     15,584  
TOTAL LIABILITIES AND EQUITY $ 48,782     $ 45,400  

 

 

Source: Costco Wholesale Corporation