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

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| Source: Costco Wholesale Corp. {Inv. Relations}

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 investments1,221  1,350 
Receivables, net1,597  1,252 
Merchandise inventories9,530  8,969 
Other current assets368  268 
    Total current assets17,460  15,218 
PROPERTY AND EQUIPMENT   
Land5,436  5,395 
Buildings and improvements14,395  13,994 
Equipment and fixtures6,363  6,077 
Construction in progress697  701 
 26,891  26,167 
Less accumulated depreciation and amortization(9,549) (9,124)
    Net property and equipment17,342  17,043 
OTHER ASSETS828  902 
    TOTAL ASSETS$35,630  $33,163 
LIABILITIES AND EQUITY   
CURRENT LIABILITIES   
Accounts payable$8,764  $7,612 
Current portion of long-term debt2,257  1,100 
Accrued salaries and benefits2,780  2,629 
Accrued member rewards910  869 
Deferred membership fees1,458  1,362 
Other current liabilities2,691  2,003 
    Total current liabilities18,860  15,575 
LONG-TERM DEBT, excluding current portion2,815  4,061 
OTHER LIABILITIES1,243  1,195 
    Total liabilities22,918  20,831 
COMMITMENTS AND CONTINGENCIES   
EQUITY   
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding0  0 
Common stock $.005 par value; 900,000,000 shares authorized; 438,941,000 and 437,524,000 shares issued and outstanding2  2 
Additional paid-in capital5,631  5,490 
Accumulated other comprehensive loss(1,333) (1,099)
Retained earnings8,140  7,686 
    Total Costco stockholders’ equity12,440  12,079 
Noncontrolling interests272  253 
    Total equity12,712  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