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Costco Corporation Posts Q2, FY2023 Results

 03/05/2023

On March 2nd Costco Wholesale Corporation (COST) posted results for Q2 of FY2023 ending February12th. This big-box club chain serves as a bellwether for hybrid retail in-store and on line spending and is a barometer of consumer confidence, offering groceries, household necessities in bulk in addition to discretionary recreational and electronic items.

 

For the quarter, the Company earned $1,466 million on revenue (including fuel and membership fees) of $55,266 million with a diluted EPS of $3.30. For the corresponding Q2 of FY2022, Costco earned $1,299 million on equivalent revenue of $51,904 million with a diluted EPS of $2.92.  Revenue was 6.1 percent higher than in Q2 of FY2022 and net earnings rose by 12.8 percent. Gross margin for Q2 FY2023was unchanged from the corresponding Q2 at 12.3 percent. Concurrently operating margin fell from 3.5 percent in Q2 FY2022 to 3.4 percent for the most recent quarter associated with increased freight, transport, wages and utilities.

 

Comparable same-store sales for Q2 2023 (excluding fuel and foreign exchange) attained 5.2 percent. U.S. same store sales were up 5.7 percent; Canada by 3.5 percent and the Other International category, 3.8 percent. E-Commerce was down by 11.2 percent

 

On February 12th Costco posted total assets of $66,848 million. Long-term debt and lease obligations attained $11,533 million. Costco had an intraday market capitalization of $212,400 million on March 3rd. COST trades with a forward P/E of 33.3 and has ranged over the past fifty-two weeks from $406.51 to $612.27 with a 50-day moving average of $486.90. Costco closed pre-release at $488.50 on March 2nd but declined sharply on the open on March 3rd closing at $$475.26 at close of trading. COST beat consensus of $3.21 EPS on the bottom line but was light on expected sales of $55,5000 million. This was attributed to lower volume in big-ticket items according to CFO Richard Gallanti.

 

Twelve-month trailing operating margin was 3.4 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.4 percent and 29.3 percent on equity.

 

At the end of Q1 FY2023, Costco operated 848 warehouses. There are 584 in the U.S; 107 in  Canada; 40 in Mexico; 31 in Japan; 29 in the U.K. and 57 others in seven nations among the E.U., Asia and Australia.