Costco(COST) - 2024 Q4 - Annual Report

Membership and Growth - Total paid members reached 76.2 million in 2024, up from 71 million in 2023, representing a growth of approximately 7.4%[24] - Membership renewal rate was 92.9% in the U.S. and Canada, and 90.5% worldwide at the end of 2024[23] - Executive members accounted for approximately 73.3% of worldwide net sales in 2024[22] - Membership growth and loyalty are critical, with a focus on increasing Executive membership penetration and maintaining high renewal rates[48] - Membership fees increased to $65 per year for Gold Star and Business memberships, and the Executive membership fee rose from$ 120 to $130 effective September 1, 2024[25] Financial Performance - Total revenue for the 52 weeks ended September 1, 2024, was$ 254,453 million, an increase of 5% from $242,290 million in the previous year[188] - Net income attributable to Costco for the same period was$ 7,367 million, up 17% from $6,292 million in the prior year[188] - Basic net income per common share attributable to Costco increased to$ 16.59, compared to $14.18 in the previous year, reflecting a growth of 17%[188] - The company reported operating income of$ 9,285 million, which is a 14% increase from $8,114 million in the previous year[188] - Membership fees increased to$ 4,828 million, up from $4,580 million, marking a growth of approximately 5.4%[188] Assets and Liabilities - Total current assets decreased to$ 34,246 million from $35,879 million year-over-year, a decline of approximately 5%[194] - Total assets increased to$ 69,831 million, up from $68,994 million, representing a growth of about 1.2%[194] - Total liabilities rose to$ 46,209 million, compared to $43,936 million in the previous year, indicating an increase of approximately 5%[194] - Cash and cash equivalents decreased significantly to$ 9,906 million from $13,700 million, a drop of about 27%[194] - Total equity at September 1, 2024, was$ 23,622 million, up from $20,647 million at August 28, 2022, indicating a growth of 14.3%[199] Inventory and Merchandise - Merchandise inventories increased to$ 18,647 million, up from $16,651 million, reflecting a growth of approximately 12%[194] - Merchandise inventories decreased by$ 2,068 million during the fiscal year, contrasting with an increase of $1,228 million in the previous year[199] - Merchandise inventories increased to$ 18,647 million in 2024 from $16,651 million in 2023, representing a growth of about 6%[215] Employee and Compensation - The average hourly wage for employees in the U.S. reached approximately$ 31 per hour by the end of 2024[30] - The company employed 333,000 employees worldwide at the end of 2024, an increase from 316,000 in 2023[31] - The company aims to maintain a target ratio of at least 50% of its employee base as full-time employees[28] - The company’s retirement plan expenses were $963 million,$ 914 million, and $824 million for 2024, 2023, and 2022 respectively[242] - The company reported stock-based compensation of$ 818 million for the fiscal year, an increase from $774 million in the previous year[199] International Operations - International operations accounted for 28% of net sales and 33% of operating income in 2024, indicating a significant contribution to overall performance[79] - The company plans to continue expanding its international operations, which may be affected by various external factors including political and economic conditions[85] - Fluctuations in foreign exchange rates may adversely affect the financial performance of international operations, increasing exposure as the company expands globally[79] Risks and Challenges - The company faces risks related to cybersecurity, including potential reputational damage and increased costs from incidents[56] - Payment-related risks include reliance on third-party services for transaction processing, which could disrupt operations if these services are compromised[59] - The company is subject to local regulations that may restrict warehouse construction and operations, impacting future growth[45] - Disruptions in supply chain operations could adversely affect sales and member satisfaction, highlighting the importance of efficient logistics[50] - The company must effectively respond to changing consumer preferences to maintain market share and member relationships[51] Investments and Debt - Long-term debt with fixed interest rates was$ 5,919 million as of the end of 2024[165] - The company issued four Guaranteed Senior Notes totaling approximately $500 million in November 2023, with fixed interest rates ranging from 1.400% to 2.120%[262] - The estimated fair value of the company's long-term debt, including the current portion, was approximately$ 5,919 million in 2024[263] - The company repaid $77 million of its Guaranteed Senior Notes in July 2024[262] Cash Flow and Dividends - Cash dividends declared during the fiscal year amounted to$ 9,041 million, significantly higher than $1,251 million in the previous year[199] - Cash dividends declared in 2024 totaled$ 8,589 million, or $19.36 per share, compared to$ 1,703 million, or $3.84 per share, in 2023[274] - Total cash provided by operating activities for the fiscal year was$ 11,339 million, compared to $11,068 million in the prior year, reflecting a year-over-year increase of 2.4%[199] Technology and Innovation - The company is investing in technology and IT transformation projects to enhance digital resiliency, which is vital for operations[53] - The company is investing in its websites and mobile applications to enhance the omnichannel experience for members, which is crucial for maintaining competitive advantage[63]