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

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

Source:Costco Wholesale Corp.{Inv. Relations}