Source: Company reports/FGRT

Fiscal 1Q18 Results

Costco reported fiscal 1Q18 revenues of $31.8 billion, up 13.2% year over year and beating the consensus estimate of $31.1 billion. Exchange rates negatively impacted sales by about 100 basis points and gasoline inflation hurt sales by 142 basis points. Membership fees were $692 million, up 9.8% year over year. Comps increased by 10.5% year over year; comps were up 10.3% in the US, up 11.3% in Canada and up 10.1% in other international areas. E-commerce revenues were $1.3 billion, an increase of 43.5% year over year. Comps excluding gasoline and foreign currency increased by 7.9%. EPS was $1.45, up 17.1% year over year and beating the consensus estimate of $1.34. EPS benefited from a $0.09 per-share tax benefit, whereas the year-ago quarter benefited from a $0.07 per-share legal settlement. Various other items, including higher gasoline profitability and credit-card metrics offset by hurricanes Irma and Maria and a higher tax rate, negatively impacted EPS by about 70 basis points.

Details from the Quarter

• The combination of fiscal 1Q18 having one less sales day than the year-ago quarter and the timing of the Thanksgiving holiday helped US sales by about 1.5%.
• 1Q traffic was up 5.9% worldwide and 6.6% in the US, benefiting from the relative timing of the Thanksgiving holiday. Average ticket size was up about 2%, adjusted for exchange rates and gasoline inflation.
• Membership renewal rates were 90% in the US and Canada and 87.2% worldwide, flat versus the prior quarter.
• In early October, the company rolled out two new delivery options on costco.com: a dry grocery two-day delivery and same-day fresh delivery through Instacart. Costco is also offering a buy online, pick up in store on selected items, including jewelry and some laptop computers.
• At the end of the quarter, the company had 2.1 million new approved Citi Visa accounts, or 2.8 million new cards, which includes about 263,000 new accounts opened during the quarter.
• During the quarter, Costco opened seven warehouses, comprised of five net new openings plus two relocations, all in North America. The company ended the quarter with 746 warehouses in operation, including 518 in the US and Puerto Rico, 98 in Canada, 37 in Mexico, 28 in the UK, 26 in Japan, 13 in South Korea, 13 in Taiwan, nine in Australia, two in Spain, one in France and one in Iceland.
• This fiscal year, the company expects somewhere between 20 and 25 new openings, of which over half are in the US, with three in Canada, two in Korea and one each in Australia and Mexico, plus six relocations.