SOURCE: Costco

March 06, 2014 03:01 ET

Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal 2014 and February Sales Results

ISSAQUAH, WA--(Marketwired - Mar 6, 2014) - Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) announced today its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2014, ended February 16, 2014. Net sales for the quarter increased six percent, to $25.76 billion, from $24.34 billion last year. Net sales for the first half increased six percent, to $50.22 billion, from $47.55 billion last year.

Comparable sales for the twelve-week and twenty-four-week periods were as follows:

         
    12 Weeks   24 Weeks
U.S.   4%   4%
International   0%   1%
         
Total   3%   3%
         

Comparable sales for these periods, excluding negative impacts from gasoline price deflation and foreign exchange, were as follows:

         
    12 Weeks   24 Weeks
U.S.   5%   5%
International   7%   7%
         
Total   5%   5%
         

Net income for the quarter was $463 million, or $1.05 per diluted share, compared to $547 million, or $1.24 per diluted share, last year. Net income for the first half was $888 million, or $2.01 per diluted share, compared to $963 million, or $2.19 per diluted share, last year.

According to Richard Galanti, Chief Financial Officer of Costco, "Last year's net income was positively impacted by a $62 million ($0.14 per diluted share) tax benefit in connection with the portion of the special cash dividend paid by the Company in December 2012 to the Company 401(k) plan participants. Even with that distinction, however, the year-over-year comparison was unfavorable. Despite satisfactory sales results during the second fiscal quarter, several other factors led to lower earnings. These factors included: weaker sales and gross margin results in certain non-foods merchandise categories, particularly during the four-week holiday selling season; weaker gross margins in our fresh foods business; and lower reported international profits, resulting from the significant weakening of foreign exchange rates. The first four-week period of the quarter represented the majority of earnings underperformance in the quarter."

For the four-week reporting month of February ended March 2, 2014, the Company reported net sales of $7.90 billion, an increase of four percent from $7.58 billion during the similar four-week period last year. For the twenty-six week year-to-date period ended March 2, 2014, net sales were $54.22 billion, an increase of six percent from $51.35 billion during the similar twenty-six week period last year.

Comparable sales for the four-week and twenty-six-week periods ended March 2, 2014 were as follows:

         
    4 Weeks   26 Weeks
U.S.   3%   4%
International   -1%   1%
         
Total   2%   3%
         

Comparable sales for these periods, excluding the negative impacts from gasoline price deflation and foreign exchange, were as follows:

         
    4 Weeks   26 Weeks
U.S.   4%   5%
International   5%   7%
         
Total   4%   5%
         

Costco currently operates 649 warehouses, including 462 in the United States and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, nine in Korea and five in Australia. The Company plans to open up to an additional fourteen new warehouses prior to the end of its fiscal year on August 31, 2014. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom and Mexico.

A conference call to discuss these second quarter operating results and February sales results is scheduled for 8:00 a.m. (PT) today, March 6, 2014, 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, amounts expected to be spent on expansion plans, 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.

   
COSTCO WHOLESALE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(dollars in millions, except per share data)  
(unaudited)  
   
  12 Weeks Ended   24 Weeks Ended  
  February 16,
2014
  February 17,
2013
  February 16,
2014
  February 17,
2013
 
REVENUE                        
  Net sales $ 25,756   $ 24,343   $ 50,224   $ 47,547  
  Membership fees   550     528     1,099     1,039  
    Total revenue   26,306     24,871     51,323     48,586  
OPERATING EXPENSES                        
  Merchandise costs   23,043     21,766     44,867     42,492  
  Selling, general and administrative   2,531     2,361     5,032     4,693  
  Preopening expenses   8     6     32     24  
    Operating income   724     738     1,392     1,377  
OTHER INCOME (EXPENSE)                        
  Interest expense   (26 )   (25 )   (53 )   (38 )
  Interest income and other, net   30     26     48     46  
INCOME BEFORE INCOME TAXES   728     739     1,387     1,385  
  Provision for income taxes   255     185     483     410  
Net income including noncontrolling interests   473     554     904     975  
Net income attributable to noncontrolling interests   (10 )   (7 )   (16 )   (12 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 463   $ 547   $ 888   $ 963  
                         
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:                        
  Basic $ 1.05   $ 1.26   $ 2.02   $ 2.22  
  Diluted $ 1.05   $ 1.24   $ 2.01   $ 2.19  
                         
Shares used in calculation (000's)                        
  Basic   439,776     435,975     438,868     434,698  
  Diluted   442,829     439,812     442,627     439,222  
                         
                         
                         
Cash dividends declared per common share $ 0.31   $ 7.275   $ 0.62   $ 7.550  
                         
 
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(unaudited)
Subject to Reclassifications
 
    February 16,
2014
  September 1,
2013
ASSETS        
Cash and cash equivalents   $ 5,130   $ 4,644
Short-term investments     1,352     1,480
Receivables, net     1,244     1,201
Merchandise inventories     8,267     7,894
Deferred income taxes and other current assets     641     621
  Total current assets     16,634     15,840
Property and equipment, net     14,348     13,881
Other assets     584     562
TOTAL ASSETS   $ 31,566   $ 30,283
             
LIABILITIES AND EQUITY            
             
Accounts payable   $ 7,707   $ 7,872
Accrued salaries and benefits     2,260     2,037
Other current liabilities     2,647     2,181
Deferred membership fees     1,270     1,167
  Total current liabilities     13,884     13,257
Long-term debt, excluding current portion     4,985     4,998
Deferred income taxes and other liabilities     988     1,016
  Total liabilities     19,857     19,271
             
Total Costco stockholders' equity     11,515     10,833
Noncontrolling interests     194     179
  Total equity     11,709     11,012
TOTAL LIABILITIES AND EQUITY   $ 31,566   $ 30,283
             

Contact Information

  • CONTACTS:
    Costco Wholesale Corporation
    Richard Galanti
    425/313-8203
    Bob Nelson
    425/313-8255
    Jeff Elliott
    425/313-8264