Costco Wholesale Corporation (COST)
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Monthly Sales Update January 2020

Feb 5, 2020

David Sherwood
AVP of Finance and Investor Relations, Costco Wholesale Corporation

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 four-week retail month of January, which started on Monday, January 6th and ended on Sunday, February 2nd. This period is compared to the four weeks beginning on Monday, January 7th and ended on Sunday, February 3rd, 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. The risks and uncertainties include, but are not limited to, those outlined in today's call, 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 four-week month of January came in at $11.57 billion, an increase of 8.0% from $10.71 billion last year. Comparable sales were as follows. On a reported basis, the U.S. for the four weeks was at 6.9%, 22 weeks, 6.7%. In Canada, the four weeks was at 7.1%, 22 weeks, 5.5%. Other international, four weeks was at 4.5%, 22 weeks, 5.0%. Total company, the four weeks was at 6.6%, 22 weeks, 6.3%. E-commerce, four weeks, 17.6%, 22 weeks, 17.2%. Comparable sales excluding the impacts from changes in Gasoline prices and foreign exchange were as follows. In the U.S., the four weeks was at 5.6%, 22 weeks, 6.3%.

Canada, four weeks was at 4.8%, 22 weeks, 5.6%. Other international, the four weeks was at 4.5%, 22 weeks, 5.3%. Total company, four weeks was at 5.3%, 22 weeks, 6.1%. E-commerce is at 17.2% for the four weeks and for the 22 weeks, 17.1%. In terms of regional and merchandising categories, the general highlights were as follows. The US regions with the strongest results were the Midwest, Texas, and San Diego regions. Other international in local currencies, we saw the strongest results in Japan, Mexico, and Australia. Foreign currencies year-over-year relative to the US dollar impacted January comp sales as follows. Canada positively by approximately 130 basis points, other international negatively by approximately 30 basis points, and total company positively by approximately 10 basis points.

The negative impact of cannibalization was approximately 20 basis points in the U.S., 150 basis points in other international, and 30 basis points for the total company. Moving to merchandise highlights, the following comparable sales results by category for the month exclude the impact of foreign exchange. Food and sundries were positive mid-single digits. Departments with the strongest results were sundries, deli, and candy. Hard lines were positive low to mid-single digits. Better-performing departments were automotive, health and beauty aids, and garden. Soft lines were up low to mid-single digits. Better-performing departments included jewelry, special order kiosks, and housewares. Finally, fresh foods were up mid-single digits. Better-performing departments included service deli and produce. Within the ancillary businesses, Gas, hearing aids, and Pharmacy had the best comp sales increases. Gasoline price inflation positively impacted total reported comp sales by approximately 120 basis points.

The average selling price was higher year-over-year at $2.74 per gallon this year compared to $2.47 a year earlier. Our comp traffic or frequency for January was up 4.9% worldwide and 5.0% in the U.S. The average transaction was up 1.6% for the month, which includes the benefits from foreign exchange and Gasoline inflation. Looking ahead, the February reporting period will include the four weeks beginning February 3rd and ending March 1st, compared to the four weeks beginning February 4th and ending March 3rd, 2019. February sales and second quarter earnings will be announced Thursday, March 5th at 1:15 P.M. Pacific Time. A conference call will be held on March 5th at 2:00 P.M. Pacific Time to discuss the results and can be accessed live via our investor relations website.

Costco Wholesale Corporation currently operates 785 warehouses, including 546 in the U.S. and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the U.K., 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco Wholesale Corporation also operates E-commerce websites in the U.S., Canada, U.K., Mexico, Korea, Taiwan, and Japan. If you have any questions regarding our January sales results or any other investor relations questions, please do not hesitate to 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, February 12th. Thanks for calling and have a great day.