Stock Analysis on Net
Stock Analysis on Net

Costco Wholesale Corp. (NASDAQ:COST)

Common-Size Income Statement 

Costco Wholesale Corp., common-size consolidated income statement

Microsoft Excel
12 months ended: Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Net sales 100.00 100.00 100.00 100.00 100.00 100.00
Merchandise costs -89.08 -89.43 -89.52 -88.87 -88.80 -88.98
Gross margin 10.92% 10.57% 10.48% 11.13% 11.20% 11.02%
Membership fees 1.93 1.93 1.90 2.02 2.17 2.24
Selling, general and administrative -9.14 -9.08 -8.88 -9.65 -10.04 -10.10
Operating income 3.72% 3.41% 3.50% 3.49% 3.33% 3.17%
Interest expense -0.07 -0.07 -0.07 -0.09 -0.10 -0.10
Interest income 0.21 0.20 0.03 0.02 0.05 0.08
Foreign-currency transaction gains, net 0.01 0.01 0.05 0.03 0.00 0.02
Other, net 0.03 0.01 0.02 0.02 0.00 0.02
Interest income and other, net 0.25% 0.22% 0.09% 0.07% 0.06% 0.12%
Other income (expense) 0.18% 0.16% 0.02% -0.01% -0.04% 0.02%
Income before income taxes 3.90% 3.57% 3.52% 3.48% 3.29% 3.19%
Provision for income taxes -0.95 -0.92 -0.86 -0.83 -0.80 -0.71
Net income including noncontrolling interests 2.95% 2.65% 2.66% 2.64% 2.49% 2.48%
Net income attributable to noncontrolling interests 0.00 0.00 -0.03 -0.04 -0.03 -0.03
Net income attributable to Costco 2.95% 2.65% 2.62% 2.61% 2.45% 2.45%

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

The analysis of the financial percentages relative to net sales indicates several significant trends and patterns over the periods under review.

Gross Margin and Merchandise Costs
The merchandise costs as a percentage of net sales have remained relatively stable, fluctuating slightly around the range of -88.8% to -89.5%. This stability suggests consistent management of cost of goods sold despite slight oscillations. Correspondingly, the gross margin has experienced minor variation, generally staying around the 10.5% to 11.2% range. There is a subtle decline in gross margin noticeable in the 2022 period, followed by an increase in the latest period, indicating some recovery or improvement in product mix or pricing strategies.
Membership Fees
Membership fees as a proportion of net sales show a mild decreasing trend, dropping from 2.24% in 2019 to 1.93% in 2023 and 2024. This diminishment could imply either a relative reduction in membership fee revenue or an increase in overall net sales diluting the impact of these fees.
Selling, General, and Administrative Expenses (SG&A)
The SG&A expenses as a percentage of net sales demonstrate a consistent downward trend from -10.1% in 2019 to a low of -8.88% in 2022, with a slight increase back to around -9.14% by 2024. This trend indicates improving operational efficiency up until 2022, though some escalation in administrative costs is observed thereafter.
Operating Income
Operating income reflects a steady increase from 3.17% in 2019 to 3.72% in 2024, denoting improved profitability from core operations. The consistent enhancement suggests effective control over costs and possibly favorable revenue growth dynamics net of merchandise costs and SG&A expenses.
Interest Expense and Income
Interest expense has slightly decreased as a percentage of net sales, stabilizing around -0.07% in recent years, while interest income has shown a rising trend, growing noticeably from 0.08% in 2019 to 0.21% in 2024. This net improvement in interest-related components contributes positively to overall financial performance.
Other Income Components
Foreign-currency transaction gains and other miscellaneous income components have remained minimal and fairly steady, contributing marginally to total income. Other income (expense) shows improvement, moving from marginal negative figures to positive contributions in the latest years, enhancing total income before taxes.
Income Before Taxes and Provision for Income Taxes
Income before income taxes has trending upward from 3.19% in 2019 to 3.9% in 2024, indicating overall stronger profitability. Conversely, the provision for income taxes has increased in percentage terms, from -0.71% to -0.95%, which slightly offsets the growth in pretax income but is consistent with rising profitability.
Net Income
Net income attributable to Costco has shown a clear upward trend, advancing from 2.45% in 2019 to 2.95% in 2024. This increase signals strengthening bottom line performance and effective management of income across the comprehensive income statement elements. The net income including noncontrolling interests follows a similar pattern.

In summary, the company demonstrates stable cost management, improving operational efficiency, and strengthening profitability over the reviewed periods. Although there are slight fluctuations in membership fee contribution and SG&A expenses in the latter years, these do not detract from the overall positive trajectory in operating income and net income. The gains in interest income and other income components further support the profit improvement trend, culminating in consistently enhanced net income margins by the latest period.