Costco Wholesale Corporation (NASDAQ:COST) Margin Falls

Costco Wholesale Corporation (NASDAQ:COST) stock fell 2.58% (As on September 23, 11:36:04 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 22. Net income for the fourth quarter was $1.868 billion compared to $1.670 billion, last year. Last year’s fourth quarter was negatively impacted by a write-off of information technology assets of $84 million pre-tax. Costco currently operates 838 warehouses, including 578 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 17 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. On a comparable sales basis from the fourth quarter, U.S. for the 16-week period on a reported basis had comp sales of 15.8%. When you exclude gas inflation and FX, gas inflation, it’d be 9.6%; Canada, 13.4% reported; 13.7% ex gas and FX; Other International, 2.9% reported; and 11.3% ex gas and FX. So all told, total company was reported as 13.7%, and excluding gas and FX, plus 10.4%. Separately, e-commerce, 7.1% reported and again, excluding FX, 8.4%. In terms of the Q4 comp sales metrics, traffic or shopping frequency increased 7.2% worldwide and up 5.2% in the U.S. The average transaction or ticket was up 6.0% worldwide and up 10.0% in the U. S. during the fourth quarter.

Moreover, Membership fee income came in at $1.327 billion or 1.88%. That was up $93 million or 7.5% on a reported basis. At Q4 end, the U.S. and Canada renewal rate came in at 92.6%, which is three-tenths of a percentage point higher from 16 weeks earlier at Q3 end. For the quarter, gross margin on a reported basis came in at 10.18% compared, down 74 basis points from last year’s reported gross margin of 10.92%.

COST in the fourth quarter of FY 22 has reported the adjusted earnings per share of $4.20, beating the analysts’ estimates for the adjusted earnings per share of $4.12, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 15.2 percent to $72.09 billion in the fourth quarter of FY 22, beating the analysts’ estimates for revenue by 0.35%.

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