Costco Wholesale Corp (COST, Financial) recently reported its fourth quarter and fiscal year 2023 operating results. The company's net income for the 17-week fourth quarter was $2.16 billion, or $4.86 per diluted share, compared to $1.868 billion or $4.20 per diluted share in the 16-week fourth quarter last year. Net sales for the 17-week fourth quarter were $77.43 billion, an increase of 9.4% from $70.76 billion in the 16-week fourth quarter last year. The company also reported strong membership growth and renewal rates, and a significant increase in e-commerce sales.
Financial Performance
Costco's comparable sales for the fourth quarter in the U.S. reported a 0.2% comp. Excluding gas deflation and FX, in the U.S., it would have been a 3.1%. Canada reported a 1.8%, and excluding gas deflation and FX, 7.4%. Other international reported 5.5%. And again, excluding gas deflation and FX, 4.4%. All told, total company reported 1.1% comp and a 3.8% ex gas deflation and FX.
Membership fee income reported in the fourth quarter was $1.509 billion, or 1.95% of sales in the fourth quarter of this fiscal year, compared to $1.327 billion or 1.88% in Q4 of last year. This represents a $182 million increase or 13.7%. If you adjust for the extra week, the 13.7% would be roughly a 7% that extra week. Excluding FX and the extra week, the increase would have been around 7.5%.
Membership Growth and Renewal Rates
Costco ended the fourth quarter with 71.0 million paid household members, up 7.9% versus a year ago; and 127.9 million cardholders, up 7.6%. At fourth quarter-end, the company had 32.3 million paid executive memberships, an increase of 981,000 during the 17 weeks since Q3-end. The executive members now represent a little over 45% of the company's paid membership and approximately 73% of worldwide sales.
E-commerce Performance
Costco's e-commerce sales in the fourth quarter ex FX decreased six-tenths of a percent year over year. However, the company reported that its e-commerce showed good improvement this quarter versus its year-over-year results in Q2 and Q3. In the previous two fiscal quarters, big-ticket discretionary, majors, home furnishings, small electrics, jewelry, and hardware, were down 15% and 20% year over year, respectively, and down just 5% year over year in the fourth quarter, with those big-ticket departments making up over half of the company's e-commerce sales.
Future Outlook
Costco plans to continue its growth trajectory in the coming fiscal year. In the fourth quarter, the company opened nine net new warehouses, including five new buildings in the U.S., two in China, and one each in Japan and Australia. For the first quarter of fiscal '24, the company plans on opening 10 net new units and as well relocating one unit. All 10 locations net new, nine are in the U.S. and one in Canada.
Overall, Costco's Q4 and fiscal year 2023 results demonstrate the company's strong financial performance and growth potential. With its focus on membership growth, e-commerce expansion, and new warehouse openings, the company is well-positioned for continued success in the future.
