8-K
COSTCO WHOLESALE CORP /NEW (COST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 30, 2024
COSTCO WHOLESALE CORPORATION
(Exact name of registrant as specified in its charter)
| Washington | 0-20355 | 91-1223280 |
|---|---|---|
| (State or other jurisdiction <br>of incorporation) | (Commission <br>File No.) | (I.R.S. Employer <br>Identification No.) |
999 Lake Drive
Issaquah, WA 98027
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: 425-313-8100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $.005 per share | COST | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On May 30, 2024, the Company issued a press release containing its operating results for the third quarter (twelve weeks) and the first thirty-six weeks of fiscal 2024, ended May 12, 2024. A copy of the press release is attached as Exhibit 99.1. In addition, a copy of the Company's earnings release supplement for the third quarter of fiscal 2024 is attached as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
99.1. Press release dated May 30, 2024.
99.2. Third quarter fiscal 2024 supplemental information.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COSTCO WHOLESALE CORPORATION | ||
|---|---|---|
| Dated: May 30, 2024 | By: | /s/ Gary Millerchip |
| Gary Millerchip | ||
| Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
Press Release
COSTCO WHOLESALE CORPORATION REPORTS THIRD QUARTER AND YEAR-TO-DATE OPERATING RESULTS FOR FISCAL 2024
ISSAQUAH, Wash., May 30, 2024 - Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the third quarter (twelve weeks) and the first 36 weeks of fiscal 2024, ended May 12, 2024.
Net sales for the quarter increased 9.1 percent, to $57.39 billion, from $52.60 billion last year. Net sales for the first 36 weeks increased 7.0 percent, to $171.44 billion, from $160.28 billion last year. Net sales were positively impacted by approximately 0.5 to 1.0 percent for the quarter from the shift of the fiscal calendar, as a result of the fifty-third week last year.
The following comparable sales data reflect comparable locations year-over-year and comparable retail weeks.
Comparable sales for the third quarter and first 36 weeks of fiscal 2024 were as follows:
| 12 Weeks | 12 Weeks | 36 Weeks | 36 Weeks | |
|---|---|---|---|---|
| Adjusted* | Adjusted* | |||
| U.S. | 6.2% | 6.0% | 4.1% | 4.5% |
| Canada | 7.7% | 7.4% | 7.7% | 8.2% |
| Other International | 7.7% | 8.5% | 9.1% | 7.9% |
| Total Company | 6.6% | 6.5% | 5.3% | 5.4% |
| E-commerce | 20.7% | 20.7% | 14.9% | 14.7% |
*Excluding the impacts from changes in gasoline prices and foreign exchange.
Net income for the quarter was $1.68 billion, $3.78 per diluted share. Last year's third quarter net income was $1.30 billion, $2.93 per diluted share, which included a non-recurring charge to merchandise costs of $298 million pretax, $0.50 per diluted share, primarily for the discontinuation of our charter shipping activities. Net income for the first 36 weeks was $5.01 billion, $11.27 per diluted share, compared to $4.13 billion, $9.30 per diluted share, last year.
Costco currently operates 878 warehouses, including 605 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, seven in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, May 30, 2024, and is available via a webcast on investor.costco.com (click on "Events & Presentations”).
Press Release
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, inflation or deflation, 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 and wages), energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, public-health related factors, 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. Comparable sales and comparable sales excluding impacts from changes in gasoline prices and foreign exchange are intended as supplemental information and are not a substitute for net sales presented in accordance with U.S. GAAP.
CONTACTS: Costco Wholesale Corporation
David Sherwood, 425/313-8239
Josh Dahmen, 425/313-8254
Andrew Yoon, 425/313-6305
COST-Earn
Press Release
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
| 12 Weeks Ended | 36 Weeks Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| May 12,<br>2024 | May 7,<br>2023 | May 12,<br>2024 | May 7,<br>2023 | |||||
| REVENUE | ||||||||
| Net sales | $ | 57,392 | $ | 52,604 | $ | 171,440 | $ | 160,280 |
| Membership fees | 1,123 | 1,044 | 3,316 | 3,071 | ||||
| Total revenue | 58,515 | 53,648 | 174,756 | 163,351 | ||||
| OPERATING EXPENSES | ||||||||
| Merchandise costs | 51,173 | 47,175 | 152,770 | 143,367 | ||||
| Selling, general and administrative | 5,145 | 4,794 | 15,743 | 14,651 | ||||
| Operating income | 2,197 | 1,679 | 6,243 | 5,333 | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | (41) | (36) | (120) | (104) | ||||
| Interest income and other, net | 128 | 128 | 504 | 295 | ||||
| INCOME BEFORE INCOME TAXES | 2,284 | 1,771 | 6,627 | 5,524 | ||||
| Provision for income taxes | 603 | 469 | 1,614 | 1,392 | ||||
| NET INCOME | $ | 1,681 | $ | 1,302 | $ | 5,013 | $ | 4,132 |
| NET INCOME PER COMMON SHARE: | ||||||||
| Basic | $ | 3.79 | $ | 2.94 | $ | 11.29 | $ | 9.31 |
| Diluted | $ | 3.78 | $ | 2.93 | $ | 11.27 | $ | 9.30 |
| Shares used in calculation (000's): | ||||||||
| Basic | 443,892 | 443,814 | 443,870 | 443,843 | ||||
| Diluted | 444,828 | 444,360 | 444,662 | 444,455 |
Press Release
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject to Reclassification
| May 12,<br>2024 | September 3,<br>2023 | |||
|---|---|---|---|---|
| ASSETS | ||||
| CURRENT ASSETS | ||||
| Cash and cash equivalents | $ | 10,404 | $ | 13,700 |
| Short-term investments | 1,095 | 1,534 | ||
| Receivables, net | 2,583 | 2,285 | ||
| Merchandise inventories | 17,430 | 16,651 | ||
| Other current assets | 1,776 | 1,709 | ||
| Total current assets | 33,288 | 35,879 | ||
| OTHER ASSETS | ||||
| Property and equipment, net | 28,062 | 26,684 | ||
| Operating lease right-of-use assets | 2,643 | 2,713 | ||
| Other long-term assets | 3,918 | 3,718 | ||
| TOTAL ASSETS | $ | 67,911 | $ | 68,994 |
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable | $ | 18,844 | $ | 17,483 |
| Accrued salaries and benefits | 4,365 | 4,278 | ||
| Accrued member rewards | 2,339 | 2,150 | ||
| Deferred membership fees | 2,553 | 2,337 | ||
| Current portion of long-term debt | 1,077 | 1,081 | ||
| Other current liabilities | 6,183 | 6,254 | ||
| Total current liabilities | 35,361 | 33,583 | ||
| OTHER LIABILITIES | ||||
| Long-term debt, excluding current portion | 5,834 | 5,377 | ||
| Long-term operating lease liabilities | 2,386 | 2,426 | ||
| Other long-term liabilities | 2,559 | 2,550 | ||
| TOTAL LIABILITIES | 46,140 | 43,936 | ||
| COMMITMENTS AND CONTINGENCIES | ||||
| EQUITY | ||||
| Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding | — | — | ||
| Common stock $0.005 par value; 900,000,000 shares authorized; 443,374,000 and 442,793,000 shares issued and outstanding | 2 | 2 | ||
| Additional paid-in capital | 7,702 | 7,340 | ||
| Accumulated other comprehensive loss | (1,922) | (1,805) | ||
| Retained earnings | 15,989 | 19,521 | ||
| TOTAL EQUITY | 21,771 | 25,058 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 67,911 | $ | 68,994 |
Press Release
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in millions)
(unaudited)
Subject to Reclassification
| 36 Weeks Ended | ||||
|---|---|---|---|---|
| May 12,<br>2024 | May 7,<br>2023 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net income | $ | 5,013 | $ | 4,132 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 1,531 | 1,389 | ||
| Non-cash lease expense | 220 | 300 | ||
| Stock-based compensation | 686 | 643 | ||
| Impairment of assets and other non-cash operating activities, net | (35) | 441 | ||
| Changes in working capital | 966 | 438 | ||
| Net cash provided by operating activities | 8,381 | 7,343 | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchases of short-term investments | (1,007) | (947) | ||
| Maturities and sales of short-term investments | 1,441 | 594 | ||
| Additions to property and equipment | (3,133) | (2,767) | ||
| Other investing activities, net | (7) | (27) | ||
| Net cash used in investing activities | (2,706) | (3,147) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Repayments of short-term borrowings | (637) | (698) | ||
| Proceeds from short-term borrowings | 628 | 667 | ||
| Repayments of long-term debt | — | (75) | ||
| Proceeds from issuance of long-term debt | 498 | — | ||
| Tax withholdings on stock-based awards | (313) | (302) | ||
| Repurchases of common stock | (484) | (446) | ||
| Cash dividend payments | (8,527) | (799) | ||
| Financing lease payments | (112) | (204) | ||
| Other financing activities, net | (1) | (93) | ||
| Net cash used in financing activities | (8,948) | (1,950) | ||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (23) | 44 | ||
| Net change in cash and cash equivalents | (3,296) | 2,290 | ||
| CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 13,700 | 10,203 | ||
| CASH AND CASH EQUIVALENTS END OF YEAR | $ | 10,404 | $ | 12,493 |
costex9928-k51224
3rd Quarter FY 2024 Supplemental Information 1 Exhibit 99.2
$57.4B Net Sales +9.1% Growth +6.6% Comparable Sales +6.5% Adjusted Comparable Sales1 +6.1% Comparable Traffic +0.5% Comparable Ticket +20.7% E-Comm Comparable Sales +20.7% Adjusted E-Comm Comparable Sales2 Q3 Highlights - Sales 1 - Comparable Sales excluding impacts from gas inflation/deflation and FX 2 - E-commerce comparable Sales excluding impacts from FX Comp Sales US Canada Other International Total Company Sales +6.2% +7.7% +7.7% +6.6% Ticket +0.7% +0.6% +0.3% +0.5% Traffic +5.5% +7.1% +7.4% +6.1% 2
Q3 Highlights - Financial Performance Reported Ex Gas Reported Ex Gas Core 0bps +2bps Ops +14bps +12bps Other Bus -6bps -5bps Central +1bps 0bps 2% Reward -1bps -1bps Equity Comp 0bps 0bps LIFO +2bps +2bps Preopening 0bps 0bps *Other +57bps +56bps Other 0bps 0bps Total +52bps +54bps Total +15bps +12bps Core on Core Sales: +10bps + = Favorable/lower, - = Unfavorable/higher Gross Margin 10.84% +52 bps vs. Q3 FY’23 +54 bps ex. gas impact SG&A 8.96% +15 bps vs. Q3 FY’23 +12 bps ex. gas impact Diluted EPS $3.78 +29.0% Growth* Net Income $1.68B +29.1% Growth* *- “Other” Items for the Quarter: - Last year's results included a non-recurring charge to merchandise costs of $298M pretax, $0.50 per diluted share, primarily for the discontinuation of our charter shipping activities. - Excluding this item net income and diluted EPS growth was 10.3% and 10.2%, respectively. 3
+7.6% Membership Income Growth +8.0% Membership Income Growth ex-FX 90.5% Worldwide Membership Renewal Rate 93.0% US/CN Renewal Rate 74.5MM Paid Memberships +7.8% Growth 133.9MM Total Cardholders +7.4% Growth 34.5MM Executive Memberships 73.1% Penetration of Sales to Executive Members Q3 Highlights - Membership 4
+20.7% E-Comm Comparable Sales 1 - E-commerce comparable Sales excluding impacts from FX +20.7% Adjusted E-Comm Comparable Sales1 Top Sales Categories: - Appliances - Gold / Silver Bullions - Gift Cards / e-Tickets Digital Metrics: - New Mobile Application Downloads: +32% - Site Traffic: +16% - Average Order Value: +8% - Costco Logistics Deliveries up 28% Digital Enhancements: - Uber Grocery expansion in US and Canada - Warehouse Inventory Online / Buy Online Pickup in Warehouse pilot items Q3 Highlights - Digital 5
Q4 FY’23 End Q1 Q2 Q3 Rest of FY (Estimated) FY’24 End (Estimated) US 591 8 3 2 10 614 Canada 107 1 - - - 108 Other International 163 - 1 - 4 168 Total 861 9 4 2 14 890 Q3 Highlights - Warehouse Expansion Daytona, FL 2/22/24 Natomas, CA: 3/14/24 6
Q3 Highlights - New Member Values KS Lemon Blueberry Loaf KS Daily Makeup Remover Towelettes 7 Lowering Prices New Items KS Farmed Shrimp $1 price reduction as of 5/21 KS Organic Pine Nuts from $29.99 to $24.99 KS Morning Buns KS Walking Shoes
Safe Harbor 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, inflation or deflation, 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 and wages), energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, public-health related factors, 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. Comparable sales and comparable sales excluding impacts from changes in gasoline prices and foreign exchange are intended as supplemental information and are not a substitute for net sales presented in accordance with U.S. GAAP. 8