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Costco Wholesale Corporation Reports First Quarter Fiscal Year 2019 Operating Results

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ISSAQUAH, Wash., Dec. 13, 2018 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ:COST) today announced its operating results for the first quarter (twelve weeks) of fiscal 2019, ended November 25, 2018.

Net sales for the first quarter were $34.31 billion, an increase of 10.3 percent from $31.12 billion during the first quarter last year.

Comparable sales for the first quarter fiscal 2019 were as follows:

           
    12 Weeks   12 Weeks
Adjusted*
 
  U.S. 11.0%   8.3%  
  Canada 2.4%   5.5%  
  Other International 4.0%   5.8%  
           
  Total Company 8.8%   7.5%  
           
  E-commerce 32.3%   26.2%  
           
*Excluding the impacts from changes in gasoline prices, foreign exchange, and a previously disclosed accounting change concerning revenue recognition (ASC 606).


Net income for the quarter was $767 million, or $1.73 per diluted share, compared to $640 million, or $1.45 per diluted share, last year. This year's first quarter benefited from a $59 million ($0.13 per diluted share) tax benefit related to stock-based compensation and a $27 million ($0.06 per diluted share) tax benefit related to implementation of the 2017 Tax Act. In addition, the quarter includes a charge of $43 million ($31 million after-tax, $0.07 per diluted share) for an adjustment to our estimate of breakage on rewards earned prior to Fiscal Year 2019 for the Citi/Visa co-branded credit card program. Last year's first quarter benefited from a $41 million ($0.09 per diluted share) tax benefit related to stock-based compensation.

Costco currently operates 768 warehouses, including 533 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, one in Iceland, and one in 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, December 13, 2018, 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

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (dollars in millions, except per share data)
(unaudited)

  12 Weeks Ended
  November 25, 2018   November 26, 2017
REVENUE      
Net sales $ 34,311     $ 31,117  
Membership fees 758     692  
Total revenue 35,069     31,809  
OPERATING EXPENSES      
Merchandise costs 30,623     27,617  
Selling, general and administrative 3,475     3,224  
Preopening expenses 22     17  
Operating income 949     951  
OTHER INCOME (EXPENSE)      
Interest expense (36 )   (37 )
Interest income and other, net 22     22  
INCOME BEFORE INCOME TAXES 935     936  
Provision for income taxes 158     285  
Net income including noncontrolling interests 777     651  
Net income attributable to noncontrolling interests (10 )   (11 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 767     $ 640  
       
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:      
Basic $ 1.75     $ 1.46  
Diluted $ 1.73     $ 1.45  
       
Shares used in calculation (000's):      
Basic 439,157     437,965  
Diluted 442,749     440,851  
       
       
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.57     $ 0.50  
               

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (amounts in millions, except par value and share data)
(unaudited)

 
Subject to Reclassifications
  November 25, 2018   September 2, 2018
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $ 6,778     $ 6,055  
Short-term investments 1,175     1,204  
Receivables, net 1,795     1,669  
Merchandise inventories 12,205     11,040  
Other current assets 1,001     321  
Total current assets 22,954     20,289  
PROPERTY AND EQUIPMENT      
Land 6,211     6,193  
Buildings and improvements 16,355     16,107  
Equipment and fixtures 7,448     7,274  
Construction in progress 1,130     1,140  
  31,144     30,714  
Less accumulated depreciation and amortization  (11,265 )   (11,033 )
Net property and equipment 19,879     19,681  
OTHER ASSETS 981     860  
TOTAL ASSETS $ 43,814     $ 40,830  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 13,133     $ 11,237  
Accrued salaries and benefits 2,982     2,994  
Accrued member rewards 1,077     1,057  
Deferred membership fees 1,695     1,624  
Other current liabilities 3,586     3,014  
Total current liabilities 22,473     19,926  
LONG-TERM DEBT, excluding current portion 6,480     6,487  
OTHER LIABILITIES 1,382     1,314  
Total liabilities 30,335     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; 440,546,000 and          
438,189,000 shares issued and outstanding 4     4  
Additional paid-in capital 6,107     6,107  
Accumulated other comprehensive loss (1,331 )   (1,199 )
Retained earnings 8,387     7,887  
Total Costco stockholders' equity 13,167     12,799  
Noncontrolling interests 312     304  
Total equity 13,479     13,103  
TOTAL LIABILITIES AND EQUITY $ 43,814     $ 40,830  

 

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