Costco Wholesale Corporation (COST)
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Monthly Sales Update November 2019

Dec 4, 2019

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 November, which started on Monday, November 4 and ended on Sunday, December 1. This period is compared to the 4 weeks beginning on Monday, November 5 and ending on Sunday, December 2, 2018. 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. November sales, primarily our online sales, were negatively impacted due to the timing of Thanksgiving, Black Friday and Cyber Monday. In addition, performance issues on the U. S.

And Canadian websites on Thanksgiving and Black Friday also negatively impacted our sales. Total and comparable sales were negatively impacted by approximately 1.5%, while our online sales were negatively impacted approximately 20 percent, with the majority of that coming from the holiday shift. Now with regards to sales. As reported in our release, net sales for the 4 week month of November came in at $13,620,000,000 an increase of 6.7% from $12,770,000,000 last year. Comparable sales were as follows.

On a reported basis, in the U. S, the 4 weeks was a 4.8%, 12 weeks was a 4.7%, 13 weeks was a 5.5%. Canada, the 4 weeks was a 5.6%, 12 weeks was a 2.9% and the 13 weeks was a 3.8%. Other international, 4 weeks was a 7.5%, 12 weeks was a 3.2% and the 13 weeks was a 4.2%. Total company, the 4 weeks was a 5.3%, 12 weeks, 4.3% and the 13 weeks, 5.1%.

E Commerce, the 4 weeks was a negative 3.6%, 12 weeks was a 5.5% and the 13 weeks was a 6.9%. Comparable sales excluding impacts from changes in gasoline prices and foreign exchange are as follows: The U. S, 4 weeks is a 4.3%, 12 weeks is a 5.0%, 13 weeks is a 5.7%. Canada, 4 weeks is a 5.8%, 12 weeks is a 5.1%, 13 weeks is a 5.7%. Other international, 4 weeks is a 6.8%, 12 weeks is a 4.5% and 13 weeks is a 5.4%.

Total company, the 4 weeks is a 4.8%, 12 weeks is a 5.0%, 13 weeks is a 5.7% e commerce, 4 weeks, negative 3.7 percent 12 weeks, 5.7% 13 weeks, 7.1%. In terms of regional and merchandising categories, the general highlights were as follows. The U. S. Regions with the strongest results were the Texas, Bay Area and Midwest other international and local currencies, we saw the strongest results in Taiwan, U.

K. And Mexico Foreign currency year over year relative to the U. S. Dollar impacted November comp sales as follows: Canada negatively by approximately 30 basis points other international positively by approximately 90 basis points and total company positively by approximately 10 basis points. The negative impact of cannibalization was approximately 10 basis points in the U.

S, 120 basis points in other international and 20 basis points for the total company. 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 single digits. Departments with the strongest results were deli, freezer and liquor. Hardlines were positive low single digits despite being negatively impacted by the holiday shift previously discussed.

Better performing departments were majors, health and beauty and hardware. Softlines were up low to mid single digits. Better performing departments included housewares, special order kiosks and apparel. And finally, fresh foods were up mid to high single digits. Better performing departments included service deli and produce.

Within the ancillary businesses, gas, hearing aids and optical had the best comp sales increases. Gasoline price inflation positively impacted total reported comp sales by approximately 40 basis points. The average selling price was higher year over year at $2.89 per gallon this year compared to $2.79 a year earlier. Our comp traffic or frequency for November was up 3.3% worldwide and 2.6% in the U. S, including the negative impact from the timing of Thanksgiving and Cyber Monday.

The average transaction was up 1.9% for the month, which includes the benefits from foreign exchange and gasoline inflation and the negative impact from the timing of the holiday. Looking ahead, we will announce our Q1 fiscal 'twenty earnings after market close on Thursday, December 12, at 1:15 p. M. Pacific Time. A call to discuss the results will be held at 2 p.

M. Pacific Time and could be streamed live via our Investor Relations website. The December reporting period will include the 5 weeks beginning December 2nd and ending January 5th compared to the 5 weeks beginning December 3rd and ending January 6, 2019. December sales will be released at 1:15 Pacific Time on January 8th. Cosco 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, 2 in Spain and 1 each in Iceland, France and China.

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

M. Pacific Time, Wednesday, December 11th. Thanks for calling, and have a great day. Myself, David Sherwood at 425-313-8239. This recording will be available until 5 pm Pacific Time, Wednesday, December 11th.

Thanks for calling Costco, and have a great day.

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