Costco(US:COST)2025-03-12 21:34Financial Performance - Net sales increased by 9% to $62,530 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 $4.02 per diluted share, compared to $1,743 million, or $3.92 per diluted share in 2024[76]. - Net sales for Q2 2025 were $62,530 million, up from $57,331 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 $36 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 $1,193 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 $6,008 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 $2,401 million, with plans to spend approximately $5,000 million during fiscal 2025[105]. Dividends and Share Repurchase - A quarterly cash dividend of $1.16 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 $1,176 million as of February 16, 2025, with $680 million allocated to international operations[110]. - Outstanding commitments under letter of credit facilities totaled $198 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].