Costco Wholesale Corp. (COST, Financial) released its fiscal fourth-quarter 2020 results after the closing bell on Sept. 24. The company surpassed earnings and revenue projections.
A rundown of the quarter
The warehouse operator posted net income of $1.39 billion, or $3.13 per share, up from income of $1.1 billion, or $2.47 per share, for the year-ago quarter. Analysts had predicted earnings per share of $2.85.
Revenue (including net sales but excluding membership fees) of $52.28 billion was up 12.5% on a year-over-year basis and was also ahead of analysts' expectations of $52.1 billion.
Comparable store sales were up 11.4% in the reported quarter. While the number of transactions plunged during the quarter (down 1.2%), the average transaction amount jumped 12.7% as compared to the same period last year due to customers taking fewer but larger shopping trips.
Operating income came in at $1.93 billion, which was higher than the $1.46 billion reported last year. The SG&A expense was 9.62% of sales as compared with 10.09% of sales reported the year before.
The company incurred incremental coronavirus-related expenses to the tune of $281 million (pretax) in the form of additional wages and sanitation. In addition, the company incurred pretax expense of $36 million, or 6 cents per diluted share, associated with pre-payment of debt of $1.5 billion.
At quarter-end, the company had cash and cash equivalents of $12.28 billion and long-term debt (barring current maturities) of $7.51 billion.
Digital sales and subscriber growth
As a result of the pandemic, customers often refrained from going to the physical stores, which is why digital traffic gained momentum during the quarter.
E-commerce comparable sales jumped 90% in the reported quarter as more customers visited the app and website.
Membership renewal rates for the quarter were a solid 91%. While paid members increased by 1.3 million, membership fee income grew by $56 million during the quarter.
Store details
During the quarter, the company launched eight new stores. For full-year fiscal 2020, the company opened as many as 13 new stores.
Costco runs a total of 795 warehouses, 552 of which are in the U.S.
Guidance
The company did not issue any guidance figures for earnings and revenue.
Disclosure: I do not hold any positions in the stocks mentioned
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