Costco Wholesale Corporation (COST)
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Monthly Sales Update August 2020

Sep 2, 2020

Speaker 1

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 4 week retail month of August, which started on Monday, August 3 and ended on Sunday, August 30. This period is compared to the 4 weeks that began on Monday, August 5 and ended on Sunday, September 1, 2019. 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.

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 the 4 week months of August came in at $13,560,000,000 an increase of 15.0 percent from $11,790,000,000 last year. For the 16 weeks ended August 30, net sales came in at $52,300,000,000 an increase of 12.7 percent from $4,400,000,000 last year. For the 52 weeks ended August 30, net sales came in at $163,200,000,000 an increase of 9.2 percent from $149,400,000,000 last year.

Comparable sales were as follows. On a reported basis, in the U. S, the 4 weeks is at 12.5 percent 16 weeks, 11.0 percent 52 weeks, 8.1 percent. In Canada, the 4 weeks is a 14.6% 16 weeks, 9.1 percent 52 weeks, 5.0 percent. Other international, the 4 weeks was a 16.1% 16 weeks, 16.1 percent 52 weeks, 8.9%.

For the total company, the 4 weeks is a 13.2% 16 weeks, 11.4% and the 52 weeks, 7.7%. E Commerce for the 4 weeks was 101.9% 16 weeks, 90.6 percent 52 weeks, 49.5 percent. Comparable sales excluding the impacts from change in gas prices and foreign exchange were as follows: the U. S. With 4 weeks was a 14.3 percent 16 weeks, 13.6 percent 52 weeks, 9.2 percent Canada, 4 weeks is a 15.0 percent 16 weeks, 12.6 percent 52 weeks, 7.4 percent other international, 4 weeks is a 15.4 percent 16 weeks, 18.8 percent 52 weeks, 11.2 percent total company in the 4 weeks is at 14.5 percent 16 weeks, 14.1 percent 52 weeks, 9.2 percent e commerce, 4 weeks, 101.6 percent 15 weeks, 91.3 percent 52 weeks, 50.1%.

August sales were negatively impacted by the shift of late today. The estimated negative impact on August sales and traffic was approximately 75 basis points in the U. S. And a little more than 50 basis points worldwide. Including the negative impact from the holiday shift, our comp traffic or frequency for August was up 0.8% worldwide and 3.1% in the U.

S. Worldwide, the average transaction was up 12 0.4%, which includes the impacts from foreign exchange and gasoline deflation. In terms of regional and merchandising categories, the general highlights were as follows: the U. S. Region with the strongest results were the Northeast, Southeast and Texas other international and local currencies, we saw the strongest results in the U.

K, Japan and Korea. Foreign currency year over year relative to the U. S. Dollar impacted the August comp sales as follows: in Canada, positively by approximately 40 basis points, other international positively by approximately 150 basis points and total company positively by approximately 25 basis points. Moving to the merchandise highlights, the following comparable sales results by category for the month exclude the impact of foreign exchange.

Food and sundries were positive mid teens. Departments with the strongest results were frozen foods, liquor and cooler. Fresh foods were up low 20s. Better performing departments included meat and produce. Hardlines were positive high-20s.

Better performing departments included major appliances, which include consumer electronics, garden and sports goods. Softlines were positive midteens. Small appliances, jewelry and apparel were strong in the month. Ancillary businesses were down low double digits. This was primarily as a result of lower gasoline, photo and food court sales.

Optical and hearing aids were lower single digits year over year. Gasoline price deflation negatively impacted total reported cost sales by approximately 100 and 50 basis points. The average selling price was lower year over year at $2.59 per gallon compared to $2.80 Looking ahead, the September reporting period will include the 5 weeks beginning August 31 and ending October 4 compared to the 5 weeks beginning September 2 and ending October 6, 2019. September sales will be announced Wednesday, October 7 at 1:15 p. M.

Pacific Time. Prior to September sales, we will be releasing our Q4 and full year fiscal 2020 earnings on September 24. Earnings will be announced after market close with a conference call to follow at 2 pm Pacific Time. The call should be streamed live via our Investor Relations website. Costco currently operates 7.95 warehouses, including 5 52 in the United States and Puerto Rico, 101 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in Korea, 13 in Taiwan, 12 in Australia, 3 in Spain and 1 each in Iceland, France and China.

Costco also operates e commerce websites in the United States, Canada, U. K, Mexico, Korea, Taiwan, Japan and Australia. If you have any questions regarding our August sales results or any other Investor Relations questions, please do not hesitate to call Bob Nelson at 425 313-8255, Kenaj Damon at 425-313-8254 or myself, David Sherwood, at 4 25313-8239. This recording will be available until 5 p. M.

Pacific Time, Wednesday, September 9. Thanks for calling and have a great day.

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