07/03/2019 21:15:00

Costco Wholesale Corporation Reports Second Quarter and Year-To-Date Operating Results for Fiscal 2019 and February Sales Results

ISSAQUAH, Wash., March 07, 2019 (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 2019, ended February 17, 2019.

Net sales for the quarter increased 7.3 percent, to $34.63 billion from $32.28 billion last year. Net sales for the first 24 weeks increased 8.7 percent, to $68.94 billion from $63.40 billion last year.

Comparable sales for the second quarter and year-to-date periods ended February 17, 2019, were as follows:

          
  12 Weeks 12 Weeks 24 Weeks 24 Weeks 
    Adjusted*   Adjusted* 
 U.S.7.4% 7.2% 9.2% 7.6% 
 Canada-0.3% 6.0% 1.1% 5.7% 
 Other International0.7% 4.8% 2.3% 5.3% 
          
 Total Company5.4% 6.7% 7.1% 7.0% 
          
 E-commerce20.2% 25.5% 25.9% 25.8% 
          

*Excluding the impacts from changes in gasoline prices, foreign exchange, and a previously disclosed accounting change concerning revenue recognition (ASC 606).

Reported net income for the quarter was $889 million, or $2.01 per diluted share, compared to $701 million, or $1.59 per diluted share, last year. Net income for the first 24 weeks was $1.66 billion, or $3.74 per diluted share, compared to $1.34 billion, or $3.04 per diluted share, last year.

For the four-week reporting month of February, ended March 3, 2019, the Company reported net sales of $10.72 billion, an increase of 5.0 percent from $10.21 billion last year. For the twenty-six week period ended March 3, 2019, net sales were $74.42 billion, an increase of 8.6 percent from $68.51 billion last year.

Comparable sales for the February and year-to-date periods ended March 3, 2019, were as follows:

          
  4 Weeks 4 Weeks 26 Weeks 26 Weeks 
    Adjusted*   Adjusted* 
 U.S.6.0% 5.7% 9.0% 7.4% 
 Canada0.0% 4.8% 1.1% 5.7% 
 Other International-5.9% -1.2% 2.3% 5.5% 
          
 Total Company3.5% 4.6% 6.9% 6.9% 
          
 E-commerce24.2% 21.6% 26.2% 25.5% 
          

*Excluding the impacts from changes in gasoline prices, foreign exchange, and a previously disclosed accounting change concerning revenue recognition (ASC 606).

February’s sales were negatively impacted approximately 1% by weather throughout the U.S. and Canada. In addition, Lunar New Year/Chinese New Year occurred eleven days earlier in February this year, negatively impacting February’s Other International sales by approximately 4.5% and Total Company sales by approximately 0.5%.

Costco currently operates 770 warehouses, including 535 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 15 in Korea, 13 in Taiwan, 10 in Australia, two in Spain, and one each in Iceland and France. Costco also operates e-commerce 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, 2019, 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. In some cases forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “likely,” “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 remediate material weaknesses in internal control, 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 17, 2019

 

February 18, 2018

 

February 17, 2019

 

February 18, 2018

REVENUE

       
Net sales$34,628  $32,279  $68,939  $63,396 
Membership fees768  716  1,526  1,408 
Total revenue35,396  32,995  70,465  64,804 

OPERATING EXPENSES

       
Merchandise costs30,720  28,733  61,343  56,350 
Selling, general and administrative3,464  3,234  6,939  6,458 
Preopening expenses9  12  31  29 
Operating income1,203  1,016  2,152  1,967 

OTHER INCOME (EXPENSE)

       
Interest expense(34) (37) (70) (74)
Interest income and other, net46  7  68  29 

INCOME BEFORE INCOME TAXES

1,215  986  2,150  1,922 
Provision for income taxes314  273  472  558 
Net income including noncontrolling interests901  713  1,678  1,364 
Net income attributable to noncontrolling interests(12) (12) (22) (23)

NET INCOME ATTRIBUTABLE TO COSTCO

$889  $701  $1,656  $1,341 
        

NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:

       
Basic$2.02  $1.60  $3.77  $3.06 
Diluted$2.01  $1.59  $3.74  $3.04 
        
Shares used in calculation (000’s):       
Basic440,284  439,022  439,721  438,494 
Diluted442,337  441,568  442,535  441,201 
        
        

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 (amounts in millions, except par value and share data)

(unaudited)

Subject to Reclassifications

   

February 17, 2019

 

September 2, 2018

ASSETS

   

CURRENT ASSETS

   
Cash and cash equivalents$6,080  $6,055 
Short-term investments1,042  1,204 
Receivables, net1,995  1,669 
Merchandise inventories11,356  11,040 
Other current assets1,175  321 
Total current assets21,648  20,289 

PROPERTY AND EQUIPMENT

   
Land6,300  6,193 
Buildings and improvements16,533  16,107 
Equipment and fixtures7,704  7,274 
Construction in progress1,165  1,140 
 31,702  30,714 
Less accumulated depreciation and amortization(11,557) (11,033)
Net property and equipment20,145  19,681 

OTHER ASSETS

1,006  860 

TOTAL ASSETS

$42,799  $40,830 

LIABILITIES AND EQUITY

   

CURRENT LIABILITIES

   
Accounts payable$10,711  $11,237 
Accrued salaries and benefits3,173  2,994 
Accrued member rewards1,130  1,057 
Deferred membership fees1,735  1,624 
Current portion of long-term debt1,698  90 
Other current liabilities4,003  2,924 
Total current liabilities22,450  19,926 

LONG-TERM DEBT, excluding current portion

4,794  6,487 

OTHER LIABILITIES

1,372  1,314 
Total liabilities28,616  27,727 

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; 439,989,000 and 438,189,000 shares issued and outstanding4  4 
Additional paid-in capital6,218  6,107 
Accumulated other comprehensive loss(1,280) (1,199)
Retained earnings8,916  7,887 
Total Costco stockholders’ equity13,858  12,799 
Noncontrolling interests325  304 
Total equity14,183  13,103 

TOTAL LIABILITIES AND EQUITY

$42,799  $40,830 
        

 

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