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


Source:Costco Wholesale Corporation