Costco Reports 7.8% Revenue Growth to $62.151 Billion in Q1 Fiscal 2025

Costco Wholesale Corporation reported strong financial performance for the first quarter of fiscal 2025, ending November 24, 2024. The company achieved total revenue of $62.151 billion, a notable increase of 7.8% from $57.799 billion in the same period last year. This growth was driven by a rise in net sales, which reached $60.985 billion, up 8% from $56.717 billion, and an increase in membership fees, which rose 8% to $1.166 billion from $1.082 billion. Net income also saw a significant increase, totaling $1.798 billion, or $4.04 per diluted share, compared to $1.589 billion, or $3.58 per diluted share, in the prior year.

The company's operating income for the quarter was $2.196 billion, reflecting a 10.7% increase from $1.984 billion in the previous year. The gross margin percentage improved to 11.28%, up from 11.04%, aided by a favorable sales mix and the performance of the co-branded credit card program. However, selling, general, and administrative (SG&A) expenses as a percentage of net sales increased slightly to 9.59% from 9.45%, primarily due to higher operational costs, including wage increases.

Costco's operational metrics showed positive trends, with total paid members increasing to 77.4 million from 72 million year-over-year. The company also reported a renewal rate of 92.8% in the U.S. and Canada, indicating strong member loyalty. The company opened 26 new warehouses since the end of the first quarter of fiscal 2024, bringing the total number of warehouses to 896 globally, including 616 in the U.S. This expansion reflects Costco's ongoing strategy to enhance its market presence and drive sales growth.

In terms of cash flow, Costco generated $3.260 billion from operating activities, a decrease from $4.651 billion in the prior year, primarily due to increased investments in merchandise inventories. The company utilized $985 million in investing activities, mainly for capital expenditures, and reported a net cash outflow of $1.193 billion in financing activities, which included dividend payments and stock repurchases. The company declared a quarterly cash dividend of $1.16 per share, reflecting its commitment to returning value to shareholders.

Looking ahead, Costco remains optimistic about its growth trajectory, emphasizing its focus on increasing net sales and maintaining competitive pricing. The company plans to continue expanding its warehouse footprint, with 22 additional new warehouses expected to open in the remainder of fiscal 2025. Despite challenges such as fluctuating gasoline prices and economic conditions, Costco's management believes that its operational efficiencies and strong membership model will support sustained profitability and growth in the coming quarters.