Costco Wholesale Corporation (COST)
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Monthly Sales Update April 2018

May 9, 2018

David Sherwood
EVP of Finance and Investor Relations, Costco Wholesale

Hello, thank you for calling Costco Wholesale Corporation. I'm David Sherwood, EVP of Finance and Investor Relations, I will review with you our sales results for the four-week retail month of April, which started on Monday, April 9th, and ended on Sunday, May 6th. This period is compared to the four weeks beginning on Monday, April 10th, and ending on Sunday, May 7th, 2017. 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, the company does not undertake to update these statements except as required by law. Now, with regard to the sales. As reported in our release, net sales for the four-week month of April came in at $10.81 billion, an increase of 13.1% from $9.56 billion last year. For the first 35 weeks of fiscal year 2018, the company reported net sales of $92.24 billion, an increase of 12.2% from $82.24 billion over the first 35 weeks of fiscal year 2017. This year's April had one additional shopping day versus last year due to the calendar shift of Easter. This positively impacted total and comparable April sales by approximately 1.15%-2%.

Comparable sales for the nine weeks of March and April combined will be provided in a moment, eliminating the impact of the Easter shift. Comparable sales were as follows. In the U.S., the four-week retail month was at 10.2%. The nine-week March, April retail combined, 9.1%. 35-week fiscal year, 8.9%. For Canada, the four-week retail month was at 14.0%. The nine-week March, April combined, 10.2%, the 35-week fiscal year, 10.1%. In other international, the four-week retail month was at 11.2%. The nine-week March, April retail was 11.8%, the 35-week fiscal year, 13.3%. The total company, the four-week retail month is at 10.9%. The nine-week March, April retail month combined, 9.6%, the 35-week fiscal year, 9.6%. For e-commerce, the four-week retail month is at 43.1%. The nine-week March, April combined, 37.8%, the 35-week fiscal year is 34.9%.

Comparable sales, excluding the impacts from changes in Gasoline prices and foreign exchange, were as follows. In the U.S., the four-week retail month, 7.9%. Nine weeks of March and April, 7.2%, the 35-week fiscal year, 7.3%. In Canada, the four-week retail month, 6.0%. Nine-week March, April is 3.8%, the 35-week fiscal year, 3.6%. Other international, the four-week retail month is at 6.3%. The nine-week March, April, 5.7%, the 35-week fiscal year, 7.7%. Total company in the four-week retail month is at 7.3%. Nine-week retail combined of March and April, 6.5%, the 35-week fiscal year, 6.8%. E-commerce, four-week retail month, 41.5%. Nine weeks of March, April combined, 36.4%, the 35-week fiscal year is 33.5%. In terms of regional and merchandising categories, the general highlights for the month of April were as follows.

The U.S. regions with the strongest results were the Southeast, Northwest, and Bay Area. Internationally, in local currencies, we saw the strongest results in Mexico, Japan, and the U.K. Foreign currencies year-over-year relative to the U.S. dollar impacted April comp sales as follows. The total company benefited approximately +150 basis points. Canada was helped approximately +650 basis points, while other international was helped by approximately +450 basis points. The impact of cannibalization on total company sales in April was approximately -50 basis points. The impact in the U.S. was a little less than -50 basis points. In Canada, they were impacted approximately -200 basis points, and our other international segment was negatively impacted by approximately -25 basis points. Moving to our merchandise highlights, the following comparable sales results by category for April exclude the impact of foreign exchange.

Food and sundries were positive mid-single digits. Departments with the strongest results were tobacco, sundries, and cooler. Hard lines were up high single digits year-over-year. Better-performing departments were office, tires, and majors. Sales in majors were up mid-teens led by appliances, TVs, computers, and tablets. Soft lines were up high single digits. Better-performing departments include apparel, small appliances, and jewelry. Fresh foods were up low to mid-single digits. The better-performing departments were service deli and produce. Within the ancillary businesses, Gasoline, hearing aids, and Optical had the best comp sales increases in April. Gasoline price inflation had approximately +200 basis points positive impact on total reported comp sales. The average selling price was up 18% at $2.93 this year compared to $2.48 last year. Our comp traffic or frequency for April was up 5.0% worldwide and up 4.9% in the U.S.

These results included the positive impact from the holiday shift. For March and April combined, comp traffic was up 4.6% worldwide and 4.7% in the U.S. The average transaction was up 5.6% for the month, which includes the combined impacts from foreign exchange and Gasoline price inflation. The May reporting period will include the four weeks beginning May 7th and ending Sunday, June 3rd, 2018, compared to the four weeks beginning May 8th and ending Sunday, June 4th, 2017. We plan to announce our May sales results Wednesday, June 6th, 2018, at 6:00 P.M. Pacific Time. In addition, we will announce our third quarter fiscal 2018 earnings after market close on Wednesday, May 31st, 2018, at 1:15 P.M. Pacific Time. A call to discuss these results will be held at 2:00 P.M. Pacific Time and can be streamed live via our investor relations website.

Costco currently operates 749 warehouses, including 519 in the U.S. and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in Iceland, and 1 in France. Costco also operates e-commerce websites in the U.S., Canada, U.K., Mexico, Korea, and Taiwan. If you have any questions regarding our April sales results or any other investor relations questions, please do not hesitate to call 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, May 16th. Thanks for calling Costco, and have a great day.