Costco Keeps Momentum Going Through Q4

In a market rattled by the COVID-19 pandemic, Costco combined store and online operations to drive fourth quarter and full year financials higher.

Fourth quarter net income was $1.39 billion, or $3.13 per diluted share, versus $1.1 billion, or $2.47 per diluted share, in the year-previous period. Costco beat a Zacks Investment Research analyst consensus estimate of $2.85 per diluted share.

The company noted that the fourth quarter numbers include the negative effect of incremental expense related to COVID-19 premium wages and sanitation costs of $281 million pretax, or 47 cents per diluted share, and a $36 million pretax charge, or six cents per diluted share, related to a $1.5 billion debt prepayment. Partially offsetting those items were an $84 million pretax benefit, or 15 cents per diluted share, for the partial reversal of a $123 million pretax, or 22 cents per diluted share, reserve related to a product tax assessment taken in the year-past fourth quarter.

With the impact of gasoline prices and foriegn exchange volatility excluded, comparable sales gained 13.6% in the United States, 12.6% in Canada and 18.8% in other international markets for a company total of 14.1% in the quarter year over year, the company reported. E-commerce comps gained 91.3% versus the year-before period.

Market basket increases drove most of the comp gains, Richard Galanti, the company’s CFO, said in a conference call, adding that core operations, including softlines, hardlines, food and sundries and fresh foods, all advanced substantially in the quarter.

Net sales increased 12.5% to $52.28 billion versus the quarter a year before while total revenue advanced to $53.38 billion from $47.5 billion. Operating income was $1.93 billion versus $1.46 billion in the year-prior quarter.

For the full fiscal year, net income was $4 billion, or $9.02 per diluted share, up from $3.66 billion, or $8.26 per diluted share, in fiscal 2019.

With fuel and foriegn exchange effects excluded, U.S. comps gained 9.2%, 7.4% in Canada, 11.2% in other international markets for a company total of 9.2% year over year. E-commerce comps gained 50.1% versus the year earlier.

Total revenues were $166.76 billion and net sales were $163.22 billion versus $152.7 billion and $149.35 billion in the year previous. Operating income was $5.44 billion versus $4.74 billion in the year before.