On September 26, 2024, Costco Wholesale Corp (COST, Financial) released its 8-K filing detailing the operating results for the 16-week fourth quarter and the 52-week fiscal year ended September 1, 2024. The company reported net sales of $78.2 billion for the fourth quarter, a 1.0% increase compared to $77.4 billion in the 17-week fourth quarter of fiscal year 2023. For the full fiscal year, net sales reached $249.6 billion, up 5.0% from $237.7 billion in the previous 53-week fiscal year.
Costco operates a membership-based, no-frills retail model, offering a select product assortment in bulk quantities at bargain prices. The firm maintains a frugal cost structure by keeping inventory on pallets and storing it at the point of sale in the warehouse, allowing it to price merchandise below competing retailers. This strategy drives high sales volume per warehouse and generates strong profits on thin margins. Costco operates over 600 warehouses in the United States, capturing over 60% market share in the domestic warehouse club industry, and another 270 warehouses internationally in markets such as Canada, Mexico, Japan, and the UK.
Performance and Challenges
Costco's performance in the fourth quarter and fiscal year 2024 highlights its resilience and operational efficiency. The company reported net income of $2.354 billion, or $5.29 per diluted share, for the fourth quarter, compared to $2.160 billion, or $4.86 per diluted share, in the 17-week fourth quarter last year. This year's results included a net non-recurring tax benefit of $63 million, or $0.14 per diluted share, related to a transfer pricing settlement and true-ups of tax reserves. For the full fiscal year, net income was $7.367 billion, or $16.56 per diluted share, compared to $6.292 billion, or $14.16 per diluted share, in the prior year.
Financial Achievements
Costco's financial achievements are significant in the retail-defensive industry. The company's ability to increase net sales and net income despite economic challenges underscores its robust business model. The increase in comparable sales across all regions and the substantial growth in e-commerce sales further demonstrate Costco's adaptability and market strength.
Key Financial Metrics
Key details from Costco's financial statements include:
| Metric | 16 Weeks Ended Sep 1, 2024 | 17 Weeks Ended Sep 3, 2023 | 52 Weeks Ended Sep 1, 2024 | 53 Weeks Ended Sep 3, 2023 |
|---|---|---|---|---|
| Net Sales ($ millions) | 78,185 | 77,430 | 249,625 | 237,710 |
| Membership Fees ($ millions) | 1,512 | 1,509 | 4,828 | 4,580 |
| Total Revenue ($ millions) | 79,697 | 78,939 | 254,453 | 242,290 |
| Net Income ($ millions) | 2,354 | 2,160 | 7,367 | 6,292 |
| Net Income per Diluted Share ($) | 5.29 | 4.86 | 16.56 | 14.16 |
Analysis
Costco's performance in the fourth quarter and fiscal year 2024 reflects its strong market position and operational efficiency. The company's ability to increase net sales and net income, despite economic challenges, highlights its robust business model. The growth in comparable sales across all regions and the substantial increase in e-commerce sales further demonstrate Costco's adaptability and market strength.
Costco's financial achievements are significant in the retail-defensive industry. The company's ability to increase net sales and net income despite economic challenges underscores its robust business model. The increase in comparable sales across all regions and the substantial growth in e-commerce sales further demonstrate Costco's adaptability and market strength.
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Explore the complete 8-K earnings release (here) from Costco Wholesale Corp for further details.
