Costco Wholesale Corporation Reports First Quarter Fiscal Year 2018 Operating Results

ISSAQUAH, Wash., Dec. 14, 2017 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq:COST) today announced its operating results for the first quarter (twelve weeks) of fiscal 2018, ended November 26, 2017.

Net sales for the first quarter were $31.12 billion, an increase of 13.3 percent from $27.47 billion during the first quarter last year.

While this year’s twelve-week first quarter included one less sales day in the U.S. than the first quarter last year (due to the shift of the Thanksgiving holiday this year), pre-Thanksgiving and Black Friday/Holiday weekend sales fell into the first quarter this year compared to the second quarter last year. Combined, these factors produced an estimated net benefit of approximately 1.5% in the U.S., and slightly less worldwide.

Comparable sales for the first quarter fiscal 2018 were as follows:

12 Weeks 12 Weeks
w/o gas inflation & FX
U.S. 10.3% 8.7%
Canada 11.3% 4.3%
Other International 10.1% 8.2%
Total Company 10.5% 7.9%
E-commerce 43.5% 42.1%

Reported net income for the quarter was $640 million, or $1.45 per diluted share, compared to $545 million, or $1.24 per diluted share, last year. This year’s first quarter benefited from a $41 million ($0.09 per diluted share) tax benefit related to a change in accounting rules for stock-based compensation. Last year’s first quarter benefited from a non-recurring $51 million ($0.07 per diluted share after tax) legal settlement.

Costco currently operates 746 warehouses, including 518 in the United States and Puerto Rico, 98 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 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, December 14, 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 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)

November 26,
2017
November 20,
2016
REVENUE
Net sales $31,117 $27,469
Membership fees 692 630
Total revenue 31,809 28,099
OPERATING EXPENSES
Merchandise costs 27,617 24,288
Selling, general and administrative 3,224 2,940
Preopening expenses 17 22
Operating income 951 849
OTHER INCOME (EXPENSE)
Interest expense (37) (29)
Interest income and other, net 22 26
INCOME BEFORE INCOME TAXES 936 846
Provision for income taxes 285 291
Net income including noncontrolling interests 651 555
Net income attributable to noncontrolling interests (11) (10)
NET INCOME ATTRIBUTABLE TO COSTCO $640 $545
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic $1.46 $1.24
Diluted $1.45 $1.24
Shares used in calculation: (000’s)
Basic 437,965 438,007
Diluted 440,851 440,525
Cash dividends declared per common share $0.50 $0.45

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject to Reclassifications
November 26,
2017
September 3,
2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents$5,689 $4,546
Short-term investments1,196 1,233
Receivables, net1,559 1,432
Merchandise inventories11,213 9,834
Other current assets240 272
Total current assets19,897 17,317
PROPERTY AND EQUIPMENT
Land5,915 5,690
Buildings and improvements15,523 15,127
Equipment and fixtures6,859 6,681
Construction in progress812 843
29,109 28,341
Less accumulated depreciation and amortization(10,427) (10,180)
Net property and equipment18,682 18,161
OTHER ASSETS799 869
TOTAL ASSETS$39,378 $36,347
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$11,992 $9,608
Accrued salaries and benefits2,791 2,703
Accrued member rewards973 961
Deferred membership fees1,590 1,498
Other current liabilities3,014 2,725
Total current liabilities20,360 17,495
LONG-TERM DEBT, excluding current portion6,478 6,573
OTHER LIABILITIES1,184 1,200
Total liabilities28,022 25,268
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares
issued and outstanding
0 0
Common stock $.01 par value; 900,000,000 shares authorized;
439,185,000 and 437,204,000 shares issued and outstanding
4 4
Additional paid-in capital5,811 5,800
Accumulated other comprehensive loss(1,037) (1,014)
Retained earnings6,300 5,988
Total Costco stockholders’ equity11,078 10,778
Noncontrolling interests278 301
Total equity11,356 11,079
TOTAL LIABILITIES AND EQUITY$39,378 $36,347

Source:Costco Wholesale Corporation