COST Costco Wholesale Corporation

Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the first quarter (twelve weeks) of fiscal 2020, ended November 24, 2019.

Net sales for the first quarter were $36.24 billion, an increase of 5.6 percent from $34.31 billion last year.

Comparable sales for the first quarter fiscal 2020 were as follows:

		12 Weeks		12 Weeks
				Adjusted*
	U.S.	4.7%		5.0%
	Canada	2.9%		5.1%
	Other International	3.2%		4.5%
	Total Company	4.3%		5.0%
	E-commerce	5.5%		5.7%

*Excluding the impacts from changes in gasoline prices and foreign exchange.

Total and comparable sales were negatively impacted by approximately one-half percent due to Thanksgiving occurring a week later this year. E-commerce sales in the quarter were negatively impacted by an estimated 12 percentage points.

Net income for the quarter was $844 million, or $1.90 per diluted share, compared to $767 million, or $1.73 per diluted share, last year. This year’s first quarter reflects a $77 million ($0.17 per diluted share) tax benefit related to stock-based compensation, compared to a $59 million ($0.13 per diluted share) similar benefit last year.

Costco currently operates 785 warehouses, including 546 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, and Japan.

A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, December 12, 2019, and is available via a webcast on www.costco.com (click on Investor Relations and “Play Webcast”).

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future. In some cases forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (generally including health care costs), energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, and other risks identified from time to time in the Company’s public statements and reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update these statements, except as required by law.

CONTACTS: Costco Wholesale Corporation Richard Galanti, 425/313-8203 Bob Nelson, 425/313-8255 David Sherwood, 425/313-8239 Josh Dahmen, 425/313-8254

COSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share data)(unaudited)
		12 Weeks Ended
		November 24, 2019				November 25, 2018
	REVENUE
	Net sales	$	36,236			$	34,311
	Membership fees		804				758
	Total revenue	$	37,040				35,069
	OPERATING EXPENSES
	Merchandise costs		32,233				30,623
	Selling, general and administrative		3,732				3,475
	Preopening expenses		14				22
	Operating income		1,061				949
	OTHER INCOME (EXPENSE)
	Interest expense		(38	)			(36	)
	Interest income and other, net		35				22
	INCOME BEFORE INCOME TAXES		1,058				935
	Provision for income taxes		202				158
	Net income including noncontrolling interests		856				777
	Net income attributable to noncontrolling interests		(12	)			(10	)
	NET INCOME ATTRIBUTABLE TO COSTCO	$	844			$	767
	NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
	Basic	$	1.91			$	1.75
	Diluted	$	1.90			$	1.73
	Shares used in calculation (000’s):
	Basic		441,818				439,157
	Diluted		443,680				442,749

COSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in millions, except par value and share data) (unaudited)
	Subject to Reclassification	November 24, 2019				September 1, 2019
	ASSETS
	CURRENT ASSETS
	Cash and cash equivalents	$	9,027			$	8,384
	Short-term investments	993				1,060
	Receivables, net	1,711				1,535
	Merchandise inventories	13,818				11,395
	Other current assets	1,094				1,111
	Total current assets	26,643				23,485
	PROPERTY AND EQUIPMENT
	Land	6,533				6,417
	Buildings and improvements	17,712				17,136
	Equipment and fixtures	8,243				7,801
	Construction in progress	803				1,272
	Accumulated depreciation and amortization	(12,054		)		(11,736		)
	Net property and equipment	21,237				20,890
	OTHER ASSETS
	Operating lease right-of-use assets	2,508				—
	Other long-term assets	954				1,025
	TOTAL ASSETS	$	51,342			$	45,400
	LIABILITIES AND EQUITY
	CURRENT LIABILITIES
	Accounts payable	$	14,440			$	11,679
	Accrued salaries and benefits	3,159				3,176
	Accrued member rewards	1,193				1,180
	Deferred membership fees	1,817				1,711
	Current portion of long-term debt	1,700				1,699
	Other current liabilities	3,956				3,792
	Total current liabilities	26,265				23,237
	LONG-TERM LIABILITIES
	Long-term debt, excluding current portion	5,107				5,124
	Long-term operating lease liabilities	2,353				—
	Other long-term liabilities	1,393				1,455
	TOTAL LIABILITIES	35,118				29,816
	COMMITMENTS AND CONTINGENCIES
	EQUITY
	Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding	—				—
	Common stock $0.01 par value; 900,000,000 shares authorized; 441,778,000 and 439,625,000 shares issued and outstanding	4				4
	Additional paid-in capital	6,391				6,417
	Accumulated other comprehensive loss	(1,321		)		(1,436		)
	Retained earnings	10,787				10,258
	Total Costco stockholders’ equity	15,861				15,243
	Noncontrolling interests	363				341
	TOTAL EQUITY	16,224				15,584
	TOTAL LIABILITIES AND EQUITY	$	51,342			$	45,400