Costco faces risks from fluctuating interest rates and foreign exchange rates, impacting international operations. Competition from other retailers, including online giants, poses a threat to market share. Economic downturns, inflation, and commodity price volatility could negatively affect sales and profitability. Disruptions to supply chains, cybersecurity attacks, and legal proceedings (including lawsuits and investigations) also present significant risks. The company's reliance on U.S. and California operations, and its gasoline business, exposes it to specific market vulnerabilities.
Financial Upside
Costco's 2024 results show net sales growth, driven by comparable sales and new warehouse openings. Membership fee revenue increased, benefiting from new members and Executive membership upgrades. Gross margin percentage improved, primarily due to warehouse ancillary businesses (e-commerce and gasoline). SG&A expenses as a percentage of net sales increased slightly, but sales leverage and improved productivity partially offset this. Net income and earnings per share increased substantially. The company has a dividend increase and a share repurchase program.
