Earnings Story #1:
Costco
Costco Wholesale Corporation finished
its fiscal year strong with its largest profit increase of the past 12 months.
The Washington-based membership
warehouse club last week reported a 27% increase in fourth-quarter profit to
$609 million from a year earlier.
Revenue grew 14% to $32.2 billion.
The company’s fourth-quarter success was
powered in part by its continued growth in revenue generated by Membership fees. Membership fees saw a 17% increase from last
year, while revenue generated from sales saw a 14% increase over the same time
period.
“In terms of Membership, we continue to
benefit from strong renewal rates rounding up to 90% [in] U.S. and Canada and
worldwide, 86%,” said Costco’s Chief Financial Officer, Executive Vice
President, and Director Richard A. Galanti in an earnings call held a week
before the release of the company’s annual report. “We continue to experience increasing
penetration of the executive membership,” he added.
Executive membership is Costco’s highest
membership level, according to the company’s website, and costs $110 and must
be renewed annually. Unlike the company’s
Gold Star membership ($55), Executive membership includes additional savings,
and a “household card,” which is available to any member’s spouse or immediate
family member over the age of 18.
Costco opened in Seattle in 1983, and has
grown to include warehouse locations across the world.
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Costco Quarter Four
Earnings/Revenue
Q4 2012 Q4 2011
Earnings: 609m 478m = 131/478 = 27% increase
Revenue:
Sales: 31,524 27,588
Membership: 694 590
Total: 32,218 28,178 = 4040/28178 = 14% increase
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Earnings Story #2:
Target
Target Corporation reported no
growth in second-quarter profit last August, staying steady at $704 million in
earnings.
The Minneapolis, Minnesota based
retailer did report a 3% increase in revenue from a year earlier, rising from $16.2
billion to $16.7 billion.
A 4% rise in the cost of sales, or,
the cost of producing its products, as well as rises in selling, general, and
administrative expenses helped account for the lack of profit growth despite
the bump in revenue.
The company’s 3% revenue growth is entirely attributable
to a nearly 4% growth in sales, as the retailer experienced a 0.5% decrease in revenues
from Target credit cards from a year earlier.
It’s no surprise then that Target announced
this week it would be selling its credit card portfolio to TD Bank Group at “face
value,” according to a report in Minneapolis’ “Star Tribune” newspaper.
“There’s no question the portfolio
is performing well,” Terry Scully, Target’s president of financial and retail
services, told the paper. “But we are a
retailer.”
The company’s second-quarter sales
growth confirms that retail is in fact where Target’s strength resides.
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Target Quarter Two
Earnings/Revenue
Q2 2012 Q2 2011
Earnings: 704m 704m = 0/704 = 0% increase
Revenue: 16,779m 16,249m = 534/16,240 = 3% increase
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Earnings Story #3:
McDonald’s
McDonald’s Corporation’s second-quarter
earnings dropped 4.5% to $1.3 billion, from a year earlier, according to the
company’s quarterly report released last August. Revenue grew 0.2% to $6.9 billion for the
same period.
Revenue growth for the fast food
giant is attributable to revenue generated by its franchised restaurants, which
saw a 1.6% gain from a year earlier.
Revenue generated from sales by company operated restaurants actually
fell 0.5%.
“We view ourselves primarily as a
franchisor,” the company wrote in its quarterly report, “and believe
franchising is important to delivering great, locally-relevant customer
experiences and driving profitability.”
Revenues collected from franchised
restaurants include rent and royalties, according to the report.
A rise in McDonald’s operating costs
and expenses are partly to blame for the dip in earnings for the quarter. Tellingly, there was a 5% increase in selling,
general, and administrative expenses, to $617 million from a year earlier.
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McDonald’s Quarter Two
Earnings/Revenue
Q2 2012 Q2 2011
Earnings: 1,347.0m 1,410.2m = 63.2/1,410.2 = 4.5% decrease
Revenue: 6915.9m 6905.4m = 10.5/6905.4 = 0.2% increase
