Costco Fiscal Net Slips

Home furnishings, small electrics were Q4 standouts
September 30, 2016David Gill

Costcostorefront_3x2ISSAQUAH, Wash.-Fiscal year net income for Costco slipped 1.1 percent to $2.4 billion, after a solid fourth quarter where net income edged up 1.6 percent to $779 million.

Net sales for the year, which ended Aug. 28, totaled $116.1 billion, up 2.1 percent. Same-club sales, including gasoline, were flat for the year, but were up 4 percent when gasoline was factored out.

In the fourth quarter, net sales rose 2.1 percent to $35.7 billion, with same-club sales again flat versus last year’s fourth quarter including gas, and up 3 percent without gas.

In the quarter, home furnishings and small electrics were among the best-performing categories in Costco’s hardlines segment, said Richard Galanti, executive vice president and CFO, during a conference call with financial analysts.

Gross margin for the fiscal year increased 26 basis points to 11.4 percent, and in the quarter, gross margin rose 28 basis points also to 11.4 percent. Selling, general and administrative expenses for the year increased 5.4 percent in dollars and 33 basis points as a percentage of sales, to 10.4 percent. In the quarter, SG&A rose 5.6 percent in dollars and 34 basis points as a percentage of sales to 10.3 percent.

Costco ended the fiscal year with a total of 715 warehouses, including 501 in the United States and Puerto Rico, 91 in Canada, 36 in Mexico, 28 in the United Kingdom, 25 in Japan, 12 in Korea, 12 in Taiwan, eight in Australia and two in Spain. The company said it plans to open up as many as nine new warehouses (including one relocation) before the end of calendar 2016.

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