Costco Wholesale Corporation (COST)
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Monthly Sales Update October 2019

Nov 6, 2019

David Sherwood
AVP 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 four-week retail month of October, which started on Monday, October 7th, and ended on Sunday, November 3rd. This period is compared to the four weeks beginning on Monday, October 8th, and ending on Sunday, November 4th, 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. Now with regards to sales, as we reported in our release, net sales for the four-week month of October came in at $11.92 billion, an increase of 6.8% from $11.16 billion last year. Comparable sales were as follows. On a reported basis, the U.S., the four weeks with a 6.5%, nine weeks, 5.7%. Canada, four weeks is a 4.9%, nine weeks, 2.9%. Other international, four weeks was a 2.1%, nine weeks, 2.6%. Total company, the four weeks is a 5.7%, nine weeks, 4.9%. E-commerce, the four weeks is a 16.5%, the nine weeks was a 17.1%. Comparable sales, excluding the impacts from changes in Gasoline prices and foreign exchange, were as follows. In the U.S., the four weeks was a 6.8%, nine weeks, 6.2%.

For Canada, four weeks, 6.5%, nine weeks, 5.4%. Other international, the four weeks was a 3.0%, nine weeks, 4.7%. Total company, the four weeks was a 6.3%, nine weeks, 5.9%. e-commerce for the four weeks was a 16.7%, and the nine weeks, 17.6%. In terms of regional and merchandising categories, the general highlights were as follows. The U.S. regions with the strongest results were the Bay Area, L.A., and San Diego. Other international and local currencies, we saw the strongest results in Taiwan, Spain, and Mexico. Foreign currencies year-over-year relative to the U.S. dollar hurt October comp sales as follows: Canada by approximately 80 basis points, other international by approximately 50 basis points, and total company by approximately 20 basis points. The negative impact of cannibalization was approximately 20 basis points in the U.S., 140 basis points in other international, and 40 basis points for total company.

Moving into 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 liquor, candy, and deli. Hard lines were positive mid-single digits. Better-performing departments were toys and seasonal, sporting goods, hardware, and majors. Soft lines were up mid-single digits. Better-performing departments included home furnishings, housewares, and apparel. Finally, fresh foods were up mid to high single digits. Better-performing departments included service deli and meat. Within the ancillary businesses, gas, hearing aids, and Optical had the best comp sales increases. Gasoline price deflation negatively impacted total and reported comp sales by approximately - 40 basis points. The average selling price was lower year-over-year at $2.97 per gallon this year, compared to $3.05 a year earlier.

Our comp traffic or frequency for October was up 4.7% worldwide and 4.9% in the U.S. The average transaction was up 1.0% for the month, which includes the negative impacts from foreign exchange and Gasoline deflation. Looking ahead, the November reporting period will include the four weeks beginning November 4th and ending December 1st, compared to the four weeks beginning November 5th and ending December second, 2018. November sales will be released at 1:15 Pacific Time on December 4th. Costco currently operates 783 warehouses, including 544 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 websites in the U.S., Canada, U.K., Mexico, Korea, and Taiwan.

If you have any questions regarding our October 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 PM Pacific Time Wednesday, November 13th. Thanks for calling Costco and have a great day.