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Costco Corporation Posts Q3, FY2023 Results

05/25/2023

On May 25th Costco Wholesale Corporation (COST) posted results for Q3 of FY2023 ending May 7th. This big-box, club chain serves as a bellwether for 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, home and electronic items.

 

For the quarter, the Company earned $1,302 million on revenue (including fuel and membership fees) of $53,648 million with a diluted EPS of $2.93. Results for the quarter included a non-recurring charge of $298 million attributed to cancellation of shipping charters, equivalent to $0.50 per share. For the corresponding Q3 of FY2022, Costco earned $1,353 million on equivalent revenue of $52,596 million with a diluted EPS of $3.05.

 

 Revenue was 2.0 percent higher than in Q3 of FY2022 but net earnings fell by 3.8 percent. Gross margin for Q3 FY2023 was 12.1 percent compared to 11.9 percent for Q3 FY 2022. Concurrently operating margin fell from 3.4 percent in Q3 FY2022 to 3.1 percent for the most recent quarter associated with the charge on shipping, in addition to transport, wages and utilities.

 

Comparable same-store sales for Q3 2023 (excluding fuel and foreign exchange) attained 3.5 percent. U.S. same-store sales were up 1.8 percent; Canada by 7.4 percent and the Other International category, 8.4 percent. E-Commerce was down by 10.0 percent

 

On May 7th Costco posted total assets of $66,752 million. Long-term debt and lease obligations attained $11,471 million. Costco had an intraday market capitalization of $222,300 million on May 25th. COST trades with a forward P/E of 34.3 and has ranged over the past fifty-two weeks from $443.20 to $564.75 with a 50-day moving average of $495.04. Costco closed pre-release at $482.78 on May 24th but declined slightly on the open but closed at $486.65 on May 25th. Twelve-month trailing operating margin was 3.4 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.6 percent and 28.4 percent on equity.

 

COST fell short of a consensus of $3.29 EPS and was light on expected sales of $54,600 million. This was attributed to lower volume in big-ticket and bulk items according to CFO Richard Gallanti.

 

At the end of Q3 FY2023, Costco operated 853 warehouses. There are 587 in the U.S; 107 in  Canada; 40 in Mexico; 32 in Japan; 29 in the U.K. and 58 others in seven nations among the E.U., Asia and Australia.