Costco Annual Report 2012: Quarterly Earnings Of 2013 with Sales, Revenue & Profits

Costco Wholesale Corporation and its subsidiaries, Costco, is a membership warehouse that offers branded and private-label products in a range of merchandise categories.  As of September 2013 record, the company has 634 stores of which 451 are in United States, 85 in Canada, 33 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea, and 3 in Australia.  The business was founded by James (Jim) Sinegal and Jeffrey H. Brotman in 1976 in a converted airplane hangar on Morena Boulevard, San Diego under the name “Price Club. The idea of “Price Club” was to buy large quantity of items at discount prices and sell them to small businesses at the lowest possible price. However, when the company realized it could achieve greater buying clout and serves a much greater number, Costco was formed in Seattle in the year 1983.

The business of Price Club and Costco was subsequently merged under the name “PriceCostco” in 1993. Costco became the first company ever to grow from zero to $3 billion in sales in less than 6 years. The business of Costco is to serve large families, small businesses such as family owned restaurants and some bulk purchasers through memberships. Presently they have 56 million members, 8 million businesses on board with yearly revenues around $73 billion. Costco employs over 103,000 full and part time employees in the United States alone. The average store size is 141,000 square feet. The company first launched its share in the stock market in 1985 at $10 a share.

Costco offers investors quick reasonable return in the dependable service sector. The company books all of its profits nearly 12 months in advance through the receipts of annual membership fees which are payable at the beginning of the year. Although the benefits of annual membership are deferred over the life of the membership but it accounts for nearly all of Costco’s operating profits. It is a pleasing for the company because in spite of recession and fee increase member renewal rates have remained steady; the renewal is around 90% level in  North America, and 86% on a global basis. Therefore, the company’s financial forecast enjoys a greater degree of certainty and has enough reason to believe that it can better withstand economic downturns. Further, the types of debit or credit cards that Costco accepts indicates high credit quality customer base who can survive economic downturn comfortably.

Costco Quarterly Earnings (Last Four Quarters)

Quarter Ends Sep 01
2013
May 12, 2013 February 17, 2013 November 25, 2012
Revenues 32,487.0 24,083.0 24,871.0 23,715.0
TOTAL REVENUES 32,487.0 24,083.0 24,871.0 23,715.0
Cost Of Goods Sold 28,418.0 21,038.0 21,766.0 20,726.0
GROSS PROFIT 4,069.0 3,045.0 3,105.0 2,989.0
Selling General & Admin Expenses, Total 3,115.0 2,323.0 2,367.0 2,350.0
OTHER OPERATING EXPENSES, TOTAL 3,115.0 2,323.0 2,367.0 2,350.0
OPERATING INCOME 954.0 722.0 738.0 639.0
Interest Expense -36.0 -25.0 -25.0 -13.0
Interest And Investment Income 15.0 9.0 10.0 10.0
Other Non-Operating Expenses, Total 21.0 6.0 16.0 10.0
Other Non-Operating Income (Expenses) 3.0 6.0 3.0
EBT, INCLUDING UNUSUAL ITEMS 954.0 712.0 739.0 646.0
Income Tax Expense 332.0 248.0 185.0 225.0
Minority Interest In Earnings -5.0 -5.0 -7.0 -5.0
Earnings From Continuing Operations 622.0 464.0 554.0 421.0
NET INCOME 617.0 459.0 547.0 416.0
NET INCOME TO COMMON INCLUDING EXTRA ITEMS 617.0 459.0 547.0 416.0
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS 617.0 459.0 547.0 416.0

 

Costco Annual Sales, Annual Revenue, Annual Profits (Last 5 Years)

Costco has shown remarkable success stories in discount retail over the last years. Although its stock has risen by 30% in last one year, the company considerably plays premium versus other peers in the sector. Investors may be wondering if Costco has room for more upside. The good news is that Costco is continuously making room upside. The company has made a 6.59% return on its total asset. This rate of return is normal as per its sector average. This return translates into a return on shares holders’ equity at 17.3%.

As of and for the year ended

Aug. 30, 2009
(52 weeks)

Aug. 29, 2010
(52 weeks)

Aug. 28, 2011
(52 weeks)

Sept. 2, 2012
(53 weeks)

RESULTS OF OPERATIONS        
Net sales

$69,889

$76,255

$87,048

$97,062

Merchandise costs

62,335

67,995

77,739

86,823

 

 

 

 

 

Gross margin

7,554

8,260

9,309

10,239

Membership fees

1,533

1,691

1,867

2,075

Operating income

1,777

2,077

2,439

2,759

Net income attributable to Costco

1,086

1,303

1,462

1,709

Net income per diluted common share attributable to Costco

2.47

2.92

3.30

3.89

Cash dividends declared per common share

$0.68

$0.77

$0.89

$1.03

Increase (decrease) in comparable warehouse sales (1)

 

 

 

 

United States

(2) %

4%

7%

7%

International

(8) %

19%

16%

6 %

Total

(4) %

7%

10%

7%

Increase in international comparable warehouse sales in local currency (1)

7%

8%

10%

8%

 

 

 

 

 

BALANCE SHEET DATA

 

 

 

 

Net property and equipment

$10,900

$11,314

$12,432

$12,961

Total assets

21,979

23,815

26,761

27,140

Current portion of long-term debt

80

900

1

Long-term debt, excluding current portion

2,130

2,141

1,253

1,381

Costco stockholders’ equity

$10,024

$10,829

$12,002

$12,361

 

 

 

 

 

WAREHOUSE INFORMATION

 

 

 

 

Warehouses in Operation (2)

 

 

 

 

Beginning of year(2)

512

527

572

592

Opened (3)

19

14

24

17

Closed (3)

(4)

(1)

(4)

(1)

 

 

 

 

 

End of year

527

540

592

608


Data Source: UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, D.C. 20549 (FORM 10-K)

Dollars in millions except per share and warehouse number data

(1)     Includes net sales at warehouses open more than one year, including relocated facilities. For fiscal 2012, the prior year includes the comparable 53 weeks.

(2)     Excludes in 2010 and in prior years presented warehouses operated in Mexico through a 50% owned joint venture. Mexico opened 31 of these warehouses prior to 2009 and one in 2009. The 2011 beginning-of-year figure includes the 32 Mexico warehouses consolidated at the beginning of the fiscal year.

(3)     Includes warehouse relocations and the closure in July 2009 of two Costco Home locations.

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