Costco Wholesale Corporation Reports Second Quarter and Year-To-Date Operating Results for Fiscal 2018 and February Sales Results


ISSAQUAH, Wash., March 07, 2018 (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 2018, ended February 18, 2018.

Net sales for the quarter increased 10.8 percent, to $32.28 billion from $29.13 billion last year. Net sales for the first 24 weeks of fiscal 2018 increased 12.0 percent, to $63.40 billion from $56.60 billion last year.

The Company gained an incremental sales day in the quarter due to the shift of Thanksgiving, however pre-Thanksgiving and Black Friday holiday weekend sales fell in the first quarter this year, versus the second quarter last year. This negatively impacted this year’s second quarter sales by approximately 1.4% in the U.S., and slightly less worldwide and negatively impacted E-commerce sales by approximately 7-8%.

Comparable sales for the second quarter and the twenty-four-week year-to-date periods ended February 18, 2018, were as follows:

           
     12 Weeks     12 Weeks     24 Weeks   24 Weeks 
   Fiscal Quarter Fiscal Quarter   Fiscal Year   Fiscal Year 
     w/o gas inflation & FX     w/o gas inflation & FX   
 U.S. 7.1% 5.7% 8.7% 7.1% 
 Canada 8.7% 2.5% 10.0% 3.4% 
 Other International 15.7% 7.4% 13.0% 7.8% 
           
 Total Company 8.4% 5.4% 9.4% 6.6% 
           
 E-commerce 28.5% 27.3% 35.0% 33.7% 
           

Reported net income for the quarter was $701 million, or $1.59 per diluted share, compared to $515 million, or $1.17 per diluted share, last year. Earnings per share increased $0.17 due to a net income tax benefit of $74 million, as a result of the new tax laws. Excluding this benefit, net income grew 22%. Net income for the first 24 weeks of fiscal year 2018 was $1.34 billion, or $3.04 per diluted share, compared to $1.06 billion, or $2.41 per diluted share, last year.

For the four-week reporting month of February, ended March 4, 2018, the Company reported net sales of $10.21 billion, an increase of 12.8 percent from $9.05 billion during the similar period last year. For the twenty-six week period ended March 4, 2018, net sales were $68.51 billion, an increase of 12.0 percent from $61.18 billion during the similar period last year.  Lunar New Year/Chinese New Year occurred in February this year (as compared to January last year). This positively impacted February sales by approximately 4.5% for Other International and a little more than 0.5% for Total Company.

Comparable sales for the February four-week and twenty-six-week year-to-date periods ended March 4, 2018, were as follows:

           
     4 Weeks     4 Weeks     26 Weeks   26 Weeks 
   Retail Month  Retail Month   Fiscal Year   Fiscal Year 
     w/o gas inflation & FX     w/o gas inflation & FX   
 U.S. 9.0% 7.5% 8.6% 7.1% 
 Canada 8.4% 3.2% 9.8% 3.3% 
 Other International 22.2% 14.1% 13.1% 7.7% 
           
 Total Company 10.5% 7.7% 9.4% 6.6% 
           
 E-commerce 38.1% 37.0% 35.3% 33.9% 
           

Costco currently operates 749 warehouses, including 519 in the United States and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 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, March 7, 2018, 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)
 
   12 Weeks Ended  24 Weeks Ended
    February 18,
2018
  February 12,
2017
  February 18,
2018
  February 12,
2017
REVENUE            
Net sales $32,279  $29,130  $63,396  $56,599 
Membership fees  716   636   1,408   1,266 
Total revenue  32,995   29,766   64,804   57,865 
OPERATING EXPENSES            
Merchandise costs  28,733   25,927   56,350   50,215 
Selling, general and administrative  3,234   2,980   6,458   5,920 
Preopening expenses  12   15   29   37 
Operating income  1,016   844   1,967   1,693 
OTHER INCOME (EXPENSE)            
Interest expense  (37)  (31)  (74)  (60)
Interest income and other, net  7   (4)  29   22 
INCOME BEFORE INCOME TAXES  986   809   1,922   1,655 
Provision for income taxes  273   288   558   579 
Net income including noncontrolling interests  713   521   1,364   1,076 
Net income attributable to noncontrolling interests  (12)  (6)  (23)  (16)
NET INCOME ATTRIBUTABLE TO COSTCO.  $701  $515  $1,341  $1,060 
             
NET INCOME PER COMMON SHARE
ATTRIBUTABLE TO COSTCO:
            
Basic $1.60  $1.17  $3.06  $2.42 
Diluted $1.59  $1.17  $3.04  $2.41 
             
Shares used in calculation: (000’s)            
Basic  439,022   439,127   438,494   438,567 
Diluted  441,568   440,657   441,201   440,568 
             
             
             
Cash dividends declared per common share $0.50  $0.45  $1.00  $0.90 
             


COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (amounts in millions, except par value and share data)
(unaudited)
 
Subject to Reclassifications
 February 18,
 2018
 September 3,
 2017
ASSETS   
CURRENT ASSETS   
Cash and cash equivalents$4,781  $4,546 
Short-term investments1,049  1,233 
Receivables, net2,001  1,432 
Merchandise inventories10,671  9,834 
Other current assets397  272 
Total current assets18,899  17,317 
PROPERTY AND EQUIPMENT   
Land6,129  5,690 
Buildings and improvements15,740  15,127 
Equipment and fixtures7,025  6,681 
Construction in progress909  843 
 29,803  28,341 
Less accumulated depreciation and amortization(10,754) (10,180)
Net property and equipment19,049  18,161 
OTHER ASSETS755  869 
TOTAL ASSETS$38,703  $36,347 
LIABILITIES AND EQUITY   
CURRENT LIABILITIES   
Accounts payable$10,061  $9,608 
Accrued salaries and benefits2,997  2,703 
Accrued member rewards1,023  961 
Deferred membership fees1,656  1,498 
Other current liabilities3,176  2,725 
Total current liabilities18,913  17,495 
LONG-TERM DEBT, excluding current portion6,505  6,573 
OTHER LIABILITIES1,232  1,200 
Total liabilities26,650  25,268 
COMMITMENTS AND CONTINGENCIES   
EQUITY   
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding0  0 
Common stock $.01 par value; 900,000,000 shares authorized; 438,883,000 and 437,204,000 shares issued and outstanding4  4 
Additional paid-in capital5,920  5,800 
Accumulated other comprehensive loss(897) (1,014)
Retained earnings6,727  5,988 
Total Costco stockholders’ equity11,754  10,778 
Noncontrolling interests299  301 
Total equity12,053  11,079 
TOTAL LIABILITIES AND EQUITY$38,703  $36,347