Costco Wholesale Corp. 10-Q Summary: Fiscal Q2 2025
Business Context and Reporting Period
This filing covers the 12-week fiscal quarter ended February 16, 2025, and the 24-week period ended on the same date. Costco operates 897 membership warehouses globally, with 617 in the U.S. The company reported strong growth in net sales and membership fees, driven by comparable sales increases and new warehouse openings.
Key Financial Metrics
| Metric | Q2 2025 (12 Weeks) | Q2 2024 (12 Weeks) | YTD 2025 (24 Weeks) | YTD 2024 (24 Weeks) |
|---|---|---|---|---|
| Total Revenue | $63,723 million | $58,442 million | $125,874 million | $116,241 million |
| Net Sales | $62,530 million | $57,331 million | $123,515 million | $114,048 million |
| Net Income | $1,788 million | $1,743 million | $3,586 million | $3,332 million |
| Diluted EPS | $4.02 | $3.92 | $8.06 | $7.49 |
| Gross Margin % | 10.85% | 10.80% | 11.06% | 10.92% |
| Operating Cash Flow (YTD) | $6,008 million (vs. $5,382 million YTD 2024) | |||
| Cash & Equivalents | $12,356 million (as of Feb 16, 2025) | |||
| Long-Term Debt | $5,755 million (excluding current portion) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 9% in Q2 and 8% YTD, driven by a 7% increase in comparable sales and 23 net new warehouses opened since Q2 2024.
- Membership Fees: Increased 7% in Q2 and 8% YTD, attributed to new member sign-ups and fee increases implemented in September 2024.
- Margin Expansion: Gross margin percentage improved by 5 basis points in Q2. SG&A expenses as a percentage of net sales decreased by 8 basis points in Q2 due to improved productivity and sales leverage.
- Currency Impact: Foreign currency fluctuations negatively impacted net sales by approximately $1,244 million in Q2 and $1,408 million YTD.
- Gasoline Prices: Lower gasoline prices negatively impacted net sales by $56 million in Q2 and $964 million YTD, though volume increased slightly.
Guidance, Outlook, and Risks
- Capital Expenditures: Management intends to spend approximately $5,000 million on capital expenditures for fiscal 2025. $2,401 million was spent in the first half of the year.
- Warehouse Expansion: Eight new warehouses (including one relocation) opened in the first half of 2025. The company plans to open 20 additional new warehouses (including two relocations) by the end of fiscal 2025.
- Share Repurchases: Under a $4,000 million authorization expiring in January 2027, the company repurchased 443,000 shares YTD for $413 million. $2,452 million remains available.
- Dividends: A quarterly cash dividend of $1.16 per share was declared and paid in February 2025.
- Risks: Key risks include foreign exchange rate fluctuations, inflation, rising employee costs, geopolitical conditions (tariffs), and ongoing litigation regarding labor practices, privacy, and product liability (e.g., stone countertops, baby wipes).
Investor Verification Checklist
- Verify the sustainability of the 7% comparable sales growth rate, particularly in the U.S. segment.
- Monitor the impact of foreign currency headwinds on international segment profitability.
- Review the status of ongoing legal proceedings, specifically the privacy class actions and labor-related PAGA claims.
- Assess the execution of the $5,000 million capital expenditure plan and the timeline for the 20 planned new warehouse openings.
- Track membership renewal rates (93.0% in U.S./Canada, 90.5% worldwide) to gauge member loyalty post-fee increase.