Costco Wholesale Corporation : Reports Fourth Quarter and Fiscal Year 2020 Operating Results
September 24, 2020 at 04:16 pm EDT
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ISSAQUAH, Wash., Sept. 24, 2020 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the 16-week fourth quarter and the 52-week fiscal year, ended August 30, 2020.
Net sales for the quarter increased 12.5 percent, to $52.28 billion from $46.45 billion last year. Net sales for the fiscal year increased 9.3 percent, to $163.22 billion from $149.35 billion last year.
Comparable sales for the fourth quarter and the fiscal year were as follows:
16 Weeks
16 Weeks
52 Weeks
52 Weeks
Adjusted*
Adjusted*
U.S.
11.0%
13.6%
8.1%
9.2%
Canada
9.1%
12.6%
5.0%
7.4%
Other International
16.1%
18.8%
8.9%
11.2%
Total Company
11.4%
14.1%
7.7%
9.2%
E-commerce
90.6%
91.3%
49.5%
50.1%
*Excluding the impacts from changes in gasoline prices and foreign exchange.
Net income for the fourth quarter was $1.389 billion, or $3.13 per diluted share, compared to $1.097 billion, or $2.47 per diluted share last year. This year’s fourth quarter was negatively impacted by incremental expense related to COVID-19 premium wages and sanitation costs of $281 million pretax ($0.47 per diluted share) and a $36 million pretax charge ($0.06 per diluted share) related to the prepayment of $1.5 billion of debt. These items were partially offset by an $84 million pretax benefit ($0.15 per diluted share) for the partial reversal of a reserve of $123 million pretax ($0.22 cents per diluted share), related to a product tax assessment taken in the fourth quarter of last year.
Net income for the fiscal year was $4.00 billion, or $9.02 per diluted share, compared to $3.66 billion, or $8.26 per diluted share in the prior year.
Costco currently operates 795 warehouses, including 552 in the United States and Puerto Rico, 101 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in Korea, 13 in Taiwan, 12 in Australia, three in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.
A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, September 24, 2020, 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,” “likely,” “may,” “might,” “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 maintain effective internal control over financial reporting, COVID-19 related factors and challenges, including among others, the duration of the pandemic, the unknown long-term economic impacts, reduced customer shopping due to illness, travel restrictions or financial hardship, shifts in demand away from discretionary or higher-priced products, reduced workforce due to illness, quarantine, or government mandates, temporary store closures due to reduced workforces or government mandates, or supply-chain disruptions, 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 CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share data) (unaudited)
16 Weeks Ended
52 Weeks Ended
August 30, 2020
September 1, 2019
August 30, 2020
September 1, 2019
REVENUE
Net sales
$
52,277
$
46,448
$
163,220
$
149,351
Membership fees
1,106
1,050
3,541
3,352
Total revenue
53,383
47,498
166,761
152,703
OPERATING EXPENSES
Merchandise costs
46,401
41,310
144,939
132,886
Selling, general and administrative
5,027
4,684
16,332
14,994
Preopening expenses
26
41
55
86
Operating income
1,929
1,463
5,435
4,737
OTHER INCOME (EXPENSE)
Interest expense
(51
)
(45
)
(160
)
(150
)
Interest income and other, net
(9
)
74
92
178
INCOME BEFORE INCOME TAXES
1,869
1,492
5,367
4,765
Provision for income taxes
465
382
1,308
1,061
Net income including noncontrolling interests
1,404
1,110
4,059
3,704
Net income attributable to noncontrolling interests
(15
)
(13
)
(57
)
(45
)
NET INCOME ATTRIBUTABLE TO COSTCO
$
1,389
$
1,097
$
4,002
$
3,659
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic
$
3.14
$
2.49
$
9.05
$
8.32
Diluted
$
3.13
$
2.47
$
9.02
$
8.26
Shares used in calculation (000’s):
Basic
442,843
439,727
442,297
439,755
Diluted
444,231
443,400
443,901
442,923
COSTCO WHOLESALE CORPORATION CONSOLIDATED BALANCE SHEETS (amounts in millions, except par value and share data) (unaudited)
Subject to Reclassification
August 30, 2020
September 1, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
12,277
$
8,384
Short-term investments
1,028
1,060
Receivables, net
1,550
1,535
Merchandise inventories
12,242
11,395
Other current assets
1,023
1,111
Total current assets
28,120
23,485
OTHER ASSETS
Property and equipment, net
21,807
20,890
Operating lease right-of-use assets
2,788
—
Other long-term assets
2,841
1,025
TOTAL ASSETS
$
55,556
$
45,400
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable
$
14,172
$
11,679
Accrued salaries and benefits
3,605
3,176
Accrued member rewards
1,393
1,180
Deferred membership fees
1,851
1,711
Current portion of long-term debt
95
1,699
Other current liabilities
3,728
3,792
Total current liabilities
24,844
23,237
OTHER LIABILITIES
Long-term debt, excluding current portion
7,514
5,124
Long-term operating lease liabilities
2,558
—
Other long-term liabilities
1,935
1,455
TOTAL LIABILITIES
36,851
29,816
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; 441,255,000 and 439,625,000 shares issued and outstanding
Costco Wholesale Corporation specializes in the distribution of products and services at discount prices (food, sports equipment, household appliances, books, toys, jewelry, TVs, cameras, photo developing and printing services, etc.). The group develops its activity through a network of warehouse stores opened to individuals or companies who have paid a subscription fee. Net sales break down by revenue source as follows:
- sales of products (98.1%);
- sales of subscriptions (1.9%).
As of 03/09/2023, Costco Wholesale Corporation had a network of 861 warehouse stores located in the United States and Puerto Rico (591), Canada (107), Mexico (40), Japan (33), the United Kingdom (29), Korea (18), Australia (15), Taiwan (14), China (5), Spain (4), France (2), Sweden, New Zealand and Iceland.
Net sales are distributed geographically as follows: the United States (72.9%), Canada (13.6%) and other (13.5%).