Costco Wholesale Corporation Q4 2024 Earnings Call Overview

Costco Wholesale Corporation (NASDAQ:COST) reported a solid performance in its Fourth Quarter 2024 Earnings Call held on September 1, 2024. CFO Gary Millerchip and CEO Ron Vachris discussed the company’s financial results, operational highlights, and strategic initiatives. Costco saw a 9% year-over-year increase in net income, reaching $2.354 billion, or $5.29 per diluted share, and a 1% rise in net sales to $78.2 billion. Adjusted sales were up 7.3%, with a notable 18.9% increase in e-commerce sales. The company announced plans to open 29 new warehouses in fiscal 2025, focusing on both U.S. and international markets.

Key Takeaways

• Costco’s net income rose to $2.354 billion, a 9% increase from the previous year.
• Net sales increased by 1% to $78.2 billion, with adjusted sales up by 7.3%.
• E-commerce sales grew by 18.9%, and the company saw a 5.4% rise in comparable sales.
• 14 new warehouses were opened in Q4, contributing to a total of 30 new openings in fiscal 2024.
• Membership grew to 76.2 million paid households, a 7.3% year-over-year increase.
• Costco plans to open 29 new locations in fiscal 2025, expanding its global presence.

Company Outlook

• Anticipates a significant impact from a recent membership fee increase in fiscal 2025 and 2026.
• Optimistic about growth opportunities, particularly in e-commerce and technology.
• Plans to balance store openings between international and domestic markets in 2025.

Bearish Highlights

• SG&A costs rose slightly, adjusted for gas deflation.
• Higher wages in the U.S. and Canada created a headwind of approximately 4 basis points.
• Interest income decreased due to a special dividend paid earlier in the year.

Bullish Highlights

• Strong core merchandising sales, with non-foods leading comparable sales growth.
• Focus on sustainability, including reducing plastic packaging and localizing production.
• Continued digital business momentum, with 3.5 million app downloads in Q4.

Misses

• Gas sales were slightly down due to lower prices.
• Some categories faced supply constraints, affecting product flow.

Q&A Highlights

• Contingency plans to mitigate risks from a potential port strike during the holiday season.
• Stable customer response to the membership fee increase, with no significant change in renewal rates.

Costco’s leadership emphasized their strategic focus on enhancing member value and operational efficiencies. They expressed confidence in managing SG&A costs and improving gross margins while maintaining competitive pricing. Costco’s proactive growth approach, particularly in technology and e-commerce, positions it to capitalize on emerging opportunities and drive long-term member value.

InvestingPro Insights

Costco’s strong Q4 2024 performance is evident in its healthy market metrics and position. With a market capitalization of $399.64 billion and a 7.75% revenue growth in the past 12 months, Costco showcases financial stability. The company has maintained dividend payments for 21 consecutive years, aligning with its commitment to shareholder returns. The dividend yield stands at 0.51%. Notably, Costco’s P/E ratio of 55.9 indicates high investor confidence in its growth prospects.

Full Transcript – Q4 2024 Earnings Call

[The full transcript contains detailed earnings call speech and Q&A sections, following the initial overview and insights shared above.]

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