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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 International 0.7%   4.8%   2.3%   5.3%  
                   
  Total Company 5.4%   6.7%   7.1%   7.0%  
                   
  E-commerce 20.2%   25.5%   25.9%   25.8%  
                   

/EIN News/ -- *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%  
  Canada 0.0%   4.8%   1.1%   5.7%  
  Other International -5.9%   -1.2%   2.3%   5.5%  
                   
  Total Company 3.5%   4.6%   6.9%   6.9%  
                   
  E-commerce 24.2%   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 fees 768     716     1,526     1,408  
Total revenue 35,396     32,995     70,465     64,804  
OPERATING EXPENSES              
Merchandise costs 30,720     28,733     61,343     56,350  
Selling, general and administrative 3,464     3,234     6,939     6,458  
Preopening expenses 9     12     31     29  
Operating income 1,203     1,016     2,152     1,967  
OTHER INCOME (EXPENSE)              
Interest expense (34 )   (37 )   (70 )   (74 )
Interest income and other, net 46     7     68     29  
INCOME BEFORE INCOME TAXES 1,215     986     2,150     1,922  
Provision for income taxes 314     273     472     558  
Net income including noncontrolling interests 901     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):              
Basic 440,284     439,022     439,721     438,494  
Diluted 442,337     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 investments 1,042     1,204  
Receivables, net 1,995     1,669  
Merchandise inventories 11,356     11,040  
Other current assets 1,175     321  
Total current assets 21,648     20,289  
PROPERTY AND EQUIPMENT      
Land 6,300     6,193  
Buildings and improvements 16,533     16,107  
Equipment and fixtures 7,704     7,274  
Construction in progress 1,165     1,140  
  31,702     30,714  
Less accumulated depreciation and amortization (11,557 )   (11,033 )
Net property and equipment 20,145     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 benefits 3,173     2,994  
Accrued member rewards 1,130     1,057  
Deferred membership fees 1,735     1,624  
Current portion of long-term debt 1,698     90  
Other current liabilities 4,003     2,924  
Total current liabilities 22,450     19,926  
LONG-TERM DEBT, excluding current portion 4,794     6,487  
OTHER LIABILITIES 1,372     1,314  
Total liabilities 28,616     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 outstanding 4     4  
Additional paid-in capital 6,218     6,107  
Accumulated other comprehensive loss (1,280 )   (1,199 )
Retained earnings 8,916     7,887  
Total Costco stockholders’ equity 13,858     12,799  
Noncontrolling interests 325     304  
Total equity 14,183     13,103  
TOTAL LIABILITIES AND EQUITY $ 42,799     $ 40,830  
               

 

Distribution channels: Retail


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