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Costco Wholesale Corporation Reports Second Quarter and Year-To-Date Operating Results for Fiscal 2019 and February Sales Results

Published: 2019-03-07 21:15:00 ET
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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 Weeks12 Weeks24 Weeks24 Weeks
Adjusted*Adjusted*
U.S.7.4%7.2%9.2%7.6%
Canada-0.3%6.0%1.1%5.7%
Other International0.7%4.8%2.3%5.3%
Total Company5.4%6.7%7.1%7.0%
E-commerce20.2%25.5%25.9%25.8%

*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 Weeks4 Weeks26 Weeks26 Weeks
Adjusted*Adjusted*
U.S.6.0%5.7%9.0%7.4%
Canada0.0%4.8%1.1%5.7%
Other International-5.9%-1.2%2.3%5.5%
Total Company3.5%4.6%6.9%6.9%
E-commerce24.2%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 Ended24 Weeks Ended
February 17, 2019February 18, 2018February 17, 2019February 18, 2018
REVENUE
Net sales$34,628$32,279$68,939$63,396
Membership fees7687161,5261,408
Total revenue35,39632,99570,46564,804
OPERATING EXPENSES
Merchandise costs30,72028,73361,34356,350
Selling, general and administrative3,4643,2346,9396,458
Preopening expenses9123129
Operating income1,2031,0162,1521,967
OTHER INCOME (EXPENSE)
Interest expense(34)(37)(70)(74)
Interest income and other, net4676829
INCOME BEFORE INCOME TAXES1,2159862,1501,922
Provision for income taxes314273472558
Net income including noncontrolling interests9017131,6781,364
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):
Basic440,284439,022439,721438,494
Diluted442,337441,568442,535441,201

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in millions, except par value and share data)

(unaudited)

Subject to Reclassifications

February 17, 2019September 2, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents$6,080$6,055
Short-term investments1,0421,204
Receivables, net1,9951,669
Merchandise inventories11,35611,040
Other current assets1,175321
Total current assets21,64820,289
PROPERTY AND EQUIPMENT
Land6,3006,193
Buildings and improvements16,53316,107
Equipment and fixtures7,7047,274
Construction in progress1,1651,140
31,70230,714
Less accumulated depreciation and amortization(11,557)(11,033)
Net property and equipment20,14519,681
OTHER ASSETS1,006860
TOTAL ASSETS$42,799$40,830
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$10,711$11,237
Accrued salaries and benefits3,1732,994
Accrued member rewards1,1301,057
Deferred membership fees1,7351,624
Current portion of long-term debt1,69890
Other current liabilities4,0032,924
Total current liabilities22,45019,926
LONG-TERM DEBT, excluding current portion4,7946,487
OTHER LIABILITIES1,3721,314
Total liabilities28,61627,727
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 outstanding44
Additional paid-in capital6,2186,107
Accumulated other comprehensive loss(1,280)(1,199)
Retained earnings8,9167,887
Total Costco stockholders' equity13,85812,799
Noncontrolling interests325304
Total equity14,18313,103
TOTAL LIABILITIES AND EQUITY$42,799$40,830

Source: Costco Wholesale Corporation