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): March 7, 2018
COSTCO WHOLESALE CORPORATION
(Exact name of registrant as specified in its charter)
Washington | 0-20355 | 91-1223280 | ||
(State or other jurisdiction of incorporation) |
(Commission File No.) |
(I.R.S. Employer Identification No.) |
999 Lake Drive
Issaquah, WA 98027
(Address of principal executive offices and zip code)
Registrants 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)) |
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 March 7, 2018, the Company issued a press release containing its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2018, ended February 18, 2018. A copy of the press release is included in Item 9.01.
Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits. The following exhibit is included in this report:
99.1. | Press release dated March 7, 2018. |
2
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, on March 7, 2018.
COSTCO WHOLESALE CORPORATION | ||
By: | /s/ Richard A. Galanti | |
Richard A. Galanti | ||
Executive Vice President and Chief Financial Officer |
3
Exhibit 99.1
Press Release |
COSTCO WHOLESALE CORPORATION REPORTS SECOND QUARTER AND YEAR-TO-DATE
OPERATING RESULTS FOR FISCAL 2018 AND FEBRUARY SALES RESULTS
ISSAQUAH, Wash., March 7, 2018 - Costco Wholesale Corporation (Costco or the Company) (Nasdaq: COST) today announced its operating results for the second quarter (twelve weeks) and the first 24 weeks of fiscal 2018, ended February 18, 2018.
Net sales for the quarter increased 10.8 percent, to $32.28 billion from $29.13 billion last year. Net sales for the first 24 weeks of fiscal 2018 increased 12.0 percent, to $63.40 billion from $56.60 billion last year.
The Company gained an incremental sales day in the quarter due to the shift of Thanksgiving, however pre-Thanksgiving and Black Friday holiday weekend sales fell in the first quarter this year, versus the second quarter last year. This negatively impacted this years second quarter sales by approximately 1.4% in the U.S., and slightly less worldwide and negatively impacted E-commerce sales by approximately 7-8%.
Comparable sales for the second quarter and the twenty-four-week year-to-date periods ended February 18, 2018, were as follows:
12 Weeks | 12 Weeks | 24 Weeks | 24 Weeks | |||||||||||||
Fiscal Quarter | Fiscal Quarter | Fiscal Year | Fiscal Year | |||||||||||||
w/o gas inflation & FX | w/o gas inflation & FX | |||||||||||||||
U.S. |
7.1 | % | 5.7 | % | 8.7 | % | 7.1 | % | ||||||||
Canada |
8.7 | % | 2.5 | % | 10.0 | % | 3.4 | % | ||||||||
Other International |
15.7 | % | 7.4 | % | 13.0 | % | 7.8 | % | ||||||||
Total Company |
8.4 | % | 5.4 | % | 9.4 | % | 6.6 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
E-commerce |
28.5 | % | 27.3 | % | 35.0 | % | 33.7 | % | ||||||||
|
|
|
|
|
|
|
|
Reported net income for the quarter was $701 million, or $1.59 per diluted share, compared to $515 million, or $1.17 per diluted share, last year. Earnings per share increased $0.17 due to a net income tax benefit of $74 million, as a result of the new tax laws. Excluding this benefit, net income grew 22%. Net income for the first 24 weeks of fiscal year 2018 was $1.34 billion, or $3.04 per diluted share, compared to $1.06 billion, or $2.41 per diluted share, last year.
For the four-week reporting month of February, ended March 4, 2018, the Company reported net sales of $10.21 billion, an increase of 12.8 percent from $9.05 billion during the similar period last year. For the twenty-six week period ended March 4, 2018, net sales were $68.51 billion, an increase of 12.0 percent from $61.18 billion during the similar period last year. Lunar New Year/Chinese New Year occurred in February this year (as compared to January last year). This positively impacted February sales by approximately 4.5% for Other International and a little more than 0.5% for Total Company.
Press Release |
Comparable sales for the February four-week and twenty-six-week year-to-date periods ended March 4, 2018, were as follows:
4 Weeks | 4 Weeks | 26 Weeks | 26 Weeks | |||||||||||||
Retail Month | Retail Month | Fiscal Year | Fiscal Year | |||||||||||||
w/o gas inflation & FX | w/o gas inflation & FX | |||||||||||||||
U.S. |
9.0 | % | 7.5 | % | 8.6 | % | 7.1 | % | ||||||||
Canada |
8.4 | % | 3.2 | % | 9.8 | % | 3.3 | % | ||||||||
Other International |
22.2 | % | 14.1 | % | 13.1 | % | 7.7 | % | ||||||||
Total Company |
10.5 | % | 7.7 | % | 9.4 | % | 6.6 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
E-commerce |
38.1 | % | 37.0 | % | 35.3 | % | 33.9 | % | ||||||||
|
|
|
|
|
|
|
|
Costco currently operates 749 warehouses, including 519 in the United States and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland and one in France. Costco also operates e-commerce web 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, March 7, 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. 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 (including health care costs), energy and certain commodities, geopolitical conditions, and other risks identified from time to time in the Companys 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
Press Release |
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
12 Weeks Ended | 24 Weeks Ended | |||||||||||||||
February 18, 2018 |
February 12, 2017 |
February 18, 2018 |
February 12, 2017 |
|||||||||||||
REVENUE |
||||||||||||||||
Net sales |
$ | 32,279 | $ | 29,130 | $ | 63,396 | $ | 56,599 | ||||||||
Membership fees |
716 | 636 | 1,408 | 1,266 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
32,995 | 29,766 | 64,804 | 57,865 | ||||||||||||
OPERATING EXPENSES |
||||||||||||||||
Merchandise costs |
28,733 | 25,927 | 56,350 | 50,215 | ||||||||||||
Selling, general and administrative |
3,234 | 2,980 | 6,458 | 5,920 | ||||||||||||
Preopening expenses |
12 | 15 | 29 | 37 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
1,016 | 844 | 1,967 | 1,693 | ||||||||||||
OTHER INCOME (EXPENSE) |
||||||||||||||||
Interest expense |
(37 | ) | (31 | ) | (74 | ) | (60 | ) | ||||||||
Interest income and other, net |
7 | (4 | ) | 29 | 22 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
INCOME BEFORE INCOME TAXES |
986 | 809 | 1,922 | 1,655 | ||||||||||||
Provision for income taxes |
273 | 288 | 558 | 579 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income including noncontrolling interests |
713 | 521 | 1,364 | 1,076 | ||||||||||||
Net income attributable to noncontrolling interests |
(12 | ) | (6 | ) | (23 | ) | (16 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME ATTRIBUTABLE TO COSTCO |
$ | 701 | $ | 515 | $ | 1,341 | $ | 1,060 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: |
||||||||||||||||
Basic |
$ | 1.60 | $ | 1.17 | $ | 3.06 | $ | 2.42 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
$ | 1.59 | $ | 1.17 | $ | 3.04 | $ | 2.41 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Shares used in calculation: (000s) |
||||||||||||||||
Basic |
439,022 | 439,127 | 438,494 | 438,567 | ||||||||||||
Diluted |
441,568 | 440,657 | 441,201 | 440,568 | ||||||||||||
Cash dividends declared per common share |
$ | 0.50 | $ | 0.45 | $ | 1.00 | $ | 0.90 |
Press Release |
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject to Reclassifications
February 18, 2018 |
September 3, 2017 |
|||||||
ASSETS | ||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 4,781 | $ | 4,546 | ||||
Short-term investments |
1,049 | 1,233 | ||||||
Receivables, net |
2,001 | 1,432 | ||||||
Merchandise inventories |
10,671 | 9,834 | ||||||
Other current assets |
397 | 272 | ||||||
|
|
|
|
|||||
Total current assets |
18,899 | 17,317 | ||||||
|
|
|
|
|||||
PROPERTY AND EQUIPMENT |
||||||||
Land |
6,129 | 5,690 | ||||||
Buildings and improvements |
15,740 | 15,127 | ||||||
Equipment and fixtures |
7,025 | 6,681 | ||||||
Construction in progress |
909 | 843 | ||||||
|
|
|
|
|||||
29,803 | 28,341 | |||||||
Less accumulated depreciation and amortization |
(10,754 | ) | (10,180 | ) | ||||
|
|
|
|
|||||
Net property and equipment |
19,049 | 18,161 | ||||||
|
|
|
|
|||||
OTHER ASSETS |
755 | 869 | ||||||
|
|
|
|
|||||
TOTAL ASSETS |
$ | 38,703 | $ | 36,347 | ||||
|
|
|
|
|||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES |
||||||||
Accounts payable |
$ | 10,061 | $ | 9,608 | ||||
Accrued salaries and benefits |
2,997 | 2,703 | ||||||
Accrued member rewards |
1,023 | 961 | ||||||
Deferred membership fees |
1,656 | 1,498 | ||||||
Other current liabilities |
3,176 | 2,725 | ||||||
|
|
|
|
|||||
Total current liabilities |
18,913 | 17,495 | ||||||
LONG-TERM DEBT, excluding current portion |
6,505 | 6,573 | ||||||
OTHER LIABILITIES |
1,232 | 1,200 | ||||||
|
|
|
|
|||||
Total liabilities |
26,650 | 25,268 | ||||||
|
|
|
|
|||||
COMMITMENTS AND CONTINGENCIES |
||||||||
EQUITY |
||||||||
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding |
0 | 0 | ||||||
Common stock $.01 par value; 900,000,000 shares authorized; 438,883,000 and 437,204,000 shares issued and outstanding |
4 | 4 | ||||||
Additional paid-in capital |
5,920 | 5,800 | ||||||
Accumulated other comprehensive loss |
(897 | ) | (1,014 | ) | ||||
Retained earnings |
6,727 | 5,988 | ||||||
|
|
|
|
|||||
Total Costco stockholders equity |
11,754 | 10,778 | ||||||
Noncontrolling interests |
299 | 301 | ||||||
|
|
|
|
|||||
Total equity |
12,053 | 11,079 | ||||||
|
|
|
|
|||||
TOTAL LIABILITIES AND EQUITY |
$ | 38,703 | $ | 36,347 | ||||
|
|
|
|