Stock Analysis on Net

Costco Wholesale Corp. (NASDAQ:COST)

$24.99

Common-Size Income Statement

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Costco Wholesale Corp., common-size consolidated income statement

Microsoft Excel
12 months ended: Aug 31, 2025 Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020
Net sales
Merchandise costs
Gross margin
Membership fees
Selling, general and administrative
Operating income
Interest expense
Interest income
Foreign-currency transaction gains, net
Other, net
Interest income and other, net
Other income (expense)
Income before income taxes
Provision for income taxes
Net income including noncontrolling interests
Net income attributable to noncontrolling interests
Net income attributable to Costco

Based on: 10-K (reporting date: 2025-08-31), 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).


The analysis of the financial performance over the specified periods reveals several noteworthy trends and changes in the key financial metrics.

Gross Margin and Merchandise Costs
Merchandise costs as a percentage of net sales have slightly fluctuated, initially increasing from -88.80% to a peak near -89.52% before showing a mild improvement to -88.88%. Correspondingly, the gross margin has exhibited an inverted pattern, declining from 11.20% to a low of 10.48% followed by a recovery to 11.12%. This suggests that while the cost of merchandise slightly increased in relative terms during the middle periods, the company has managed to regain gross profitability by the latest period.
Membership Fees
Membership fees as a percentage of net sales show a gradual decrease from 2.17% down to 1.90%, stabilizing around 1.93%-1.97% in the later periods. This decline may indicate a relative reduction in the contribution of membership fees to total revenue, possibly due to changes in membership pricing or mix.
Selling, General and Administrative Expenses (SG&A)
SG&A expenses have improved notably from -10.04% of net sales down to -8.88%, before slightly increasing again to around -9.25%. The initial reduction points to effective cost management and improved operating efficiency, although the slight rise in later periods could reflect increased spending to support growth or other operational demands.
Operating Income
Operating income has shown a positive trajectory, increasing steadily from 3.33% to 3.85% of net sales. This progression indicates enhanced operational profitability, benefiting from both margin improvements and controlled overhead costs.
Net Interest and Other Income
Interest expense has consistently declined as a percentage of net sales, from -0.10% to -0.06%, which suggests reduced borrowing costs or debt levels. In contrast, interest income has generally increased, rising markedly in recent periods to around 0.17%-0.21%, indicating either improved cash management or higher interest rates on investments. The combined impact of interest income and other net income has improved from near zero to about 0.22%, contributing positively to overall profitability.
Income Before Income Taxes and Provision for Income Taxes
Income before income taxes has steadily increased from 3.29% to 4.01% of net sales, reflecting stronger pre-tax earnings. The provision for income taxes has also increased proportionally but at a slightly faster rate, rising from -0.80% to -1.01%, which may reflect changes in tax rates or tax planning strategies.
Net Income
Net income attributable to the company has improved consistently, from 2.45% to 3.00% of net sales. This improvement underscores enhanced profitability and operational efficiency, aligning with the increases seen in operating income and pre-tax earnings.

Overall, the financial data reveals a company experiencing gradual but steady improvement in profitability metrics, driven by effective cost control in merchandise and administrative expenses, as well as beneficial shifts in interest income and operating efficiencies. The rising net income margin further substantiates the positive trend in the company's financial health over the periods analyzed.