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Costco(COST) - 2025 Q2 - Quarterly Report
COSTCostco(COST)2025-03-12 21:34
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Financial Performance - Net sales increased by 9% to 62,530millioninthesecondquarterof2025,drivenbycomparablesalesgrowthandsalesfrom23newwarehousesopenedsincetheendofthesecondquarterof2024[76].−Netincomeforthesecondquarterwas62,530 million in the second quarter of 2025, driven by comparable sales growth and sales from 23 new warehouses opened since the end of the second quarter of 2024[76]. - Net income for the second quarter was 1,788 million, or 4.02perdilutedshare,comparedto4.02 per diluted share, compared to 1,743 million, or 3.92perdilutedsharein2024[76].−NetsalesforQ22025were3.92 per diluted share in 2024[76]. - Net sales for Q2 2025 were 62,530 million, up from 57,331millioninQ22024,withagrossmarginof57,331 million in Q2 2024, with a gross margin of 6,786 million[84]. - Gross margin percentage increased to 10.85% in Q2 2025, up five basis points from the previous year[85]. - Interest expense decreased to 36millioninQ22025from36 million in Q2 2025 from 41 million in Q2 2024, primarily due to repayment of Senior Notes[95]. Membership and Revenue - Membership fee revenue rose by 7% to 1,193million,primarilyduetonewmembersign−upsandmembershipfeeincreases[76].−Membershipfeerevenueincreasedby71,193 million, primarily due to new member sign-ups and membership fee increases[76]. - Membership fee revenue increased by 7% in Q2 2025 and 8% in the first half of 2025, driven by new member sign-ups and fee increases[82]. - Total paid members reached 78,400, an increase from 73,400 in the previous year[82]. Sales and Growth - Comparable sales increased by 7% in the second quarter and 6% in the first half of 2025, positively impacted by increased shopping frequency and a slightly higher average ticket[81]. - E-commerce sales grew by 21% in the second quarter and 17% in the first half of 2025[77]. - The company expects continued growth in membership and sales as it expands its warehouse base, although initial profitability may be lower for new locations[71]. Expenses and Margins - SG&A expenses as a percentage of net sales decreased by eight basis points, and by nine basis points excluding the impact of gasoline price deflation[76]. - SG&A expenses for Q2 2025 were 5,663 million, representing 9.06% of net sales, a decrease of eight basis points[92]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was 6,008millioninthefirsthalfof2025,comparedto6,008 million in the first half of 2025, compared to 5,382 million in the first half of 2024[100]. - Capital expenditures in the first half of 2025 totaled 2,401million,withplanstospendapproximately2,401 million, with plans to spend approximately 5,000 million during fiscal 2025[105]. Dividends and Share Repurchase - A quarterly cash dividend of 1.16persharewasdeclaredonJanuary23,2025,andpaidonFebruary21,2025[108].−Theremainingamountavailableforsharerepurchaseundertheauthorizedprogramwas1.16 per share was declared on January 23, 2025, and paid on February 21, 2025[108]. - The remaining amount available for share repurchase under the authorized program was 2,452 million at the end of Q2 2025[109]. Financial Risk and Commitments - The company maintains bank credit facilities with a borrowing capacity of 1,176millionasofFebruary16,2025,with1,176 million as of February 16, 2025, with 680 million allocated to international operations[110]. - Outstanding commitments under letter of credit facilities totaled 198millionattheendofthesecondquarterof2025,primarilyconsistingofstandbylettersofcredit[111].−Thecompanyhasdirectexposuretofinancialmarketriskfromfluctuationsinforeign−currencyexchangeratesandinterestrates,withnomaterialchangesreported[114].CurrencyImpact−Changesinforeigncurrenciesnegativelyimpactednetsalesbyapproximately198 million at the end of the second quarter of 2025, primarily consisting of standby letters of credit[111]. - The company has direct exposure to financial market risk from fluctuations in foreign-currency exchange rates and interest rates, with no material changes reported[114]. Currency Impact - Changes in foreign currencies negatively impacted net sales by approximately 1,244 million, or 217 basis points, primarily from Other International and Canadian operations[79]. - Lower gasoline prices negatively impacted net sales by $56 million in the second quarter, while the volume of gasoline sold increased approximately 1%[79].