Costco Likes Tax Break

Don Hogsett, Staff Staff, October 10, 2005

Issaquah, Wash. — Getting a big lift from a lower tax rate and a smaller tax bill, fourth quarter profits at Costco Wholesale Corp. climbed 19.5 percent, to $354.7 million from $296.8 million last year.

But roughly half of the lift to the bottom line came from the break in taxes, which slashed the retailer's bill 17.3 percent, or $144.2 million, yielding a cash savings of $30.1 million. Excluding the tax relief, earnings rose at a more moderate pace of 9.4 percent, to $324.6 million.

Operating profits at the warehouse giant inched up just 1 percent, to $484.6 million from $479.6 million. Providing a big lift to the bottom line, in addition to lower taxes, were two other non-operating items, a big cut in interest costs, and a jump in interest income and miscellaneous income. Interest expense was whittled 32.7 percent, to $7.3 million from $10.9 million last year, a cash savings of $3.6 million.

Costco Wholesale Corp.

Qtr. 8/28 (x000) 2005 2004 % change
a. Net sales during the fourth quarter, excluding $339.8 million in membership fees, compared with $306.4 million last year. For the 12 months, membership fees totaled $1.1 billion vs. $961,280 the prior year.
b. Fourth quarter results include $10.4 million in pre-opening expenses, compared with $11.6 million last year; a $5.5 million provision for impaired assets and closing costs, compared with $2.5 million during the same period a year ago; miscellaneous income of $38.6 million $16.5 million a year ago; and an income tax provision of $144.2 million, down 17.3 percent from $174.3 million.
c. 12-month results include $53.2 million in pre-opening costs vs. $30.5 million last year; a $16.4 million provision for impaired assets and closing costs, compared with $1.0 million last year; miscellaneous income of $109.1 million, compared with $51.6 million a year ago; and an income tax provision of $485.9 million, down 6.2 percent from $518.2 million the prior year.
Sales $16,362,437a $14,832,939a 10.3
Oper. income (EBIT) 484,591 479,565 1.0
Net income 354,699b 296,768b 19.5
Per share (diluted) 0.73 0.62 17.7
Average gross margin 10.4% 10.8%
SG&A expenses 9.6% 9.6%
12 months
Sales 51,862,072a 47,145,712a 10.0
Oper. income (EBIT) 1,543,926 1,417,099 8.9
Net income 1,063,092b 882,393c 20.5
Per share (diluted) 2.18 1.85 17.8
Average gross margin 10.6% 10.7%
SG&A expenses 9.7% 9.8%


Featured Video

  • 1200 Suppliers are Ready for You at Intertextile Shanghai

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.

CURRENT ISSUE

HTT August 2017

See the August 2017 issue of Home & Textiles Today. In this issue, we look at the Top 50 Retailing Giants Report, plus Manufacturing: Made in the USA gaining ground; International: Portugal ramping up exports; New products: NY Now home textiles introductions; Outlook: Commentary from H&TT's editors; and Planning: Trade show calendar.

See details!