Costco Wholesale Corporation
CEO : Mr. Ron M. Vachris
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2025 Q1 | 7.5% YoY | 10.7% | -100.0% | 2024-12-12 |
Ron Vachris says,
Warehouse Expansion and Openings
- In Q1 2025, Costco opened seven new warehouses, including one relocation, resulting in six net new buildings.
- Four of these new warehouses are located outside of the US.
- After the quarter ended, Costco opened its 897th warehouse in Pleasanton, California, which achieved the highest ever opening day sales for a US warehouse at $2.9 million.
- Costco projects a total of 29 warehouse openings during fiscal year 2025, with 26 being net new buildings and 10 located internationally.
Record Sales in Various Divisions
- The US bakery division sold a record-breaking 4.2 million pies in the three days prior to Thanksgiving.
- On Halloween Day, US food courts set a new record by selling 274,000 whole pizzas, a 21% increase.
- The US pharmacy business recorded prescription growth exceeding 19% in Q1, achieving new volume records.
- Costco Logistics handled nearly one million deliveries in Q1, with a record of over 196,000 deliveries in a single week.
Market Share and E-commerce Growth
- Costco continues to gain market share with its e-commerce big and bulky items fulfilled by Costco Logistics.
- Most of these e-commerce deliveries were completed in four days from the order date.
Employee Contribution and Sustainability Initiatives
- The success of these milestones is attributed to the dedication of over 330,000 employees worldwide.
- Costco has published its annual update on sustainability commitments, detailing progress on various objectives.
Looking Ahead
- Expectations are set for continued strong performance as indicated by the projected warehouse openings and market share gains.
- Shareholders can look forward to the upcoming annual meeting in January for further updates and insights.
Gary Millerchip says,
Introduction and Forward-Looking Statements
- The company emphasized that the discussion includes forward-looking statements, indicating that future projections might differ from actual outcomes due to inherent risks and uncertainties.
- It highlighted that these forward-looking statements are framed under the Private Securities Litigation Reform Act of 1995, which provides a legal basis for projections.
- The importance of understanding the limitations of comparable sales metrics was stressed, particularly how they should not be considered substitutes for GAAP net sales figures.
Financial Metrics and Comparable Sales
- Comparable sales figures were discussed, with a distinction between those including and excluding gasoline prices and foreign exchange effects.
- This highlights the company’s approach to presenting sales performance, providing supplemental information that details the impact of external variables.
Leadership Update
- Ron Vachris was introduced as a participant in the earnings call, which could imply a potential shift or emphasis in leadership strategy going forward.
- This signals a notable organizational change or addition that could influence company operations and future strategies.
Risks and Uncertainties
- The company reiterated the presence of risks and uncertainties that could materially impact projected results.
- These factors are not limited to the ones mentioned in the call, but also include those previously documented in public filings with the SEC.
- Investors are advised to consider these risks when evaluating the company’s financial outlook and stock performance.
Conclusion and Legal Considerations
- Forward-looking statements are valid only as of the call date, and the company will not update them unless legally required.
- This underscores the importance of timely information for investors and the legal framework governing corporate disclosures.
Q & A sessions,
Financial Performance Overview
- Net income for Q1 FY2025 was $1.798 billion, or $4.04 per diluted share, a significant increase from last year’s $1.589 billion or $3.58 per share.
- The current results included a tax benefit of $100 million, enhancing EPS by $0.22, while last year had a $44 million benefit, improving EPS by $0.10.
- Net sales increased by 7.5% to $60.99 billion, driven by strong US and international sales performance.
Sales and Membership Growth
- US comparable sales grew 5.2%, with a notable 7.2% when excluding gas deflation, showcasing strong core performance.
- E-commerce sales surged 13%, indicating a robust digital presence and strategy.
- Membership income rose by 7.8% to $1.166 billion, with total paid household members increasing by 7.6% to 77.4 million.
Margins and Costs
- Gross margin improved by 24 basis points to 11.28%, largely due to favorable mix and credit card co-brand programs.
- SG&A expenses rose by 14 basis points to 9.59%, influenced by increased employee wages offsetting gains from sales leverage.
- Interest income dropped to $96 million from $154 million due to lower cash balances and interest rates.
Product and Service Highlights
- Fresh and non-food categories reported high single to double-digit growth, with notable contributions from new high-quality brand introductions.
- Kirkland Signature products continue to outperform, with price reductions across several key items driving increased value perception.
- Costco’s travel services remain very popular, with members leveraging significant value-added benefits such as Costco shop cards.
Strategic Initiatives and Market Outlook
- Continued investment in digital and technology enhancements, including app functionalities that improve customer experience and drive traffic.
- Retail media presents a nascent but promising growth avenue, with early campaigns showing high returns on investment.
- Supply chain and tariff impacts are being managed with strategic inventory and vendor collaborations.
| Metric | Q1 FY2025 | Change vs Q1 FY2024 |
|---|---|---|
| Net Income | $1.798 billion | +13.2% |
| Net Sales | $60.99 billion | +7.5% |
| Membership Income | $1.166 billion | +7.8% |
No bad stock 