Costco Wholesale Corporation (COST)
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Monthly Sales Update December 2020

Jan 6, 2021

David Sherwood
Assistant VP of Finance and Investor Relations, Costco Wholesale

Hello, and thank you for calling Costco Wholesale Corporation. I'm David Sherwood, AVP of Finance and Investor Relations, and I will review our sales results for the five-week retail month of December, which started on Monday, November 30th and ended Sunday, January 3rd. This period is compared to the five weeks that began on Monday, December 2nd and ended on Sunday, January 5th, 2020. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results, and/or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call and sales release, as well as other risks identified from time to time in the company's public statements and reports filed with the SEC.

Forward-looking statements speak only as of the date they are made, and the company does not undertake to update them except as required by law. As reported in our release, net sales for December came in at $19.14 billion, an increase of 12.3% from $17.04 billion last year. Comparable sales were as follows. On a reported basis in the U.S., the five weeks was a 9.6%, 18 weeks, 12.2%. For Canada, the five weeks was an 8.0%, 18 weeks, 13.7%. Other international, the five weeks was a 19.4%, 18 weeks, 18.9%. Total company, the five weeks was a 10.7%, 18 weeks, 13.3%. For e-commerce, the five weeks was a 62.5%, 18 weeks, 75.2%. Comparable sales excluding the impacts from changes in gasoline prices and foreign exchange were as follows. In the U.S., the five weeks is 11.0%, 18 weeks, 14.3%.

In Canada, the five weeks is a 5.7%, 18 weeks, 13.3%. Other international, the five weeks is a 15.8%, 18 weeks, 16.9%. Total company, the five weeks is a 10.9%, 18 weeks, 14.5%. For e-commerce, the five weeks was a 61.6%, and 18 weeks is a 74.8%. Our comp traffic or frequency for December was down 0.6% worldwide. Traffic was negative in Canada, Mexico, and the U.K. related to tougher restrictions due to COVID spikes. We were up 1.3% in the U.S. Worldwide, the average transaction was up 11.4%, which included a negative impact of 120 basis points from gasoline deflation and 100 basis points of benefit from FX. Foreign currencies year-over-year relative to the U.S. dollar impacted December comp sales as follows. Canada, positively by approximately 290 basis points. Other international, positively by approximately 440 basis points. Total company, positively by approximately 100 basis points.

Gasoline price deflation negatively impacted total reported comp sales by approximately 120 basis points. The average selling price was 14% lower year-over-year at $2.37 per gallon this year compared to $2.77 last year. Total gallons sold also continued to be lower year-over-year, lower by approximately 10% versus last year. In terms of regional and merchandising categories, the general highlights were as follows. U.S. regions with the strongest sales increases were Southeast, Texas, and Northeast. Other international and local currencies, we saw the strongest results in Korea, U.K., and Japan. Moving to the merchandise highlights, the following comparable sales results by category for the month exclude the positive impact of foreign exchange. Food and sundries were positive low double digits. Departments with the strongest results were frozen foods, cooler sundries, and liquor. Fresh foods were up high teens. Better performing departments included meat and produce.

Hard lines were positive high teens. Better performing departments including sporting goods, majors, including consumer electronics, garden, and hardware. Soft lines were positive mid-teens. Home furnishings, housewares, and small appliances were strong in the month. Ancillary business sales were down low double digits, primarily due to lower year-over-year sales in gasoline, food court, photo, and hearing aid. Looking ahead, the January reporting period will include the four weeks beginning January 4th and ending January 31st, compared to the four weeks beginning January 6th and ending February 2nd, 2020. January sales will be announced Wednesday, February 3rd at 1:15 P.M. Pacific Time. If you have any questions regarding our December sales results or any other investor relations questions, please call Bob Nelson at 425-313-8255, Josh Dahmen at 425-313-8254, or myself, David Sherwood at 425-313-8239. This recording will be available until 5:00 P.M. Pacific Time, Wednesday, January 13th.

Thanks for calling. Have a great day.