Costco Wholesale Corporation Reports Third Quarter and Year-to-Date Operating Results for Fiscal 2009

• Press Release
• Source: Costco
• On 3:01 am EDT, Thursday May 28, 2009

ISSAQUAH, WA--(Marketwire - 05/28/09) - Costco Wholesale Corporation (NASDAQ:COST - News) announced today its operating results for the third quarter (12 weeks) and first thirty-six weeks of fiscal 2009, ended May 10, 2009.

Net sales for the third quarter of fiscal 2009 declined five percent, to $15.48 billion, from $16.26 billion during the third quarter of fiscal 2008. Net sales for the first thirty-six weeks of fiscal 2009 declined one percent, to $48.00 billion, from $48.35 billion during the first thirty-six weeks of fiscal 2008.

Comparable sales for the fiscal third quarter and first thirty-six weeks of fiscal 2009 were as follows:

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                               12 Weeks      36 Weeks
                               --------      --------
    U.S.                          -5%           -1%
    International                -12%          -10%

    Total                         -7%           -3%
                               ========      ========

Comparable sales for the 12-week and 36-week periods, excluding the negative impacts from gasoline deflation and foreign exchange (primarily in Canada, the United Kingdom and Korea), were as follows:

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                               12 Weeks      36 Weeks
                               --------      --------
    U.S. (w/o gas deflation)       0%           +2%
    International (w/o Fx)        +8%           +8%

    Total                         +2%           +4%
                               ========      ========

Net income for the third quarter of fiscal 2009 was $209.6 million, or $.48 per diluted share, compared to $295.1 million, or $.67 per diluted share, during the third quarter of fiscal 2008. Net income for the first thirty-six weeks of fiscal 2009 was $711.8 million, or $1.62 per diluted share, compared to net income for the first thirty-six weeks of fiscal 2008 of $884.9 million, or $1.99 per diluted share.

Richard Galanti, Chief Financial Officer of Costco, stated that "third quarter 2009 earnings results were negatively impacted by several factors, including: a pretax charge of $34 million (mostly non-cash) related to a litigation settlement concerning our membership renewal policy; higher employee benefits costs, mainly consisting of higher health care usage; lower international profits, a result of the significant strengthening of the U.S. dollar when compared to the currencies of Canada, the United Kingdom, Korea and Mexico; and lastly, ongoing weakness in sales, particularly sales of higher-ticket, discretionary items."

Costco currently operates 555 warehouses, including 407 in the United States and Puerto Rico, 77 in Canada, 21 in the United Kingdom, six in Korea, five in Taiwan, eight in Japan and 31 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com and at www.costco.ca in Canada. The Company plans to open an additional six new warehouses prior to the end of its 2009 fiscal year on August 30, 2009.

A conference call to discuss these third quarter operating results is scheduled for 8:00 a.m. (PT) today, May 28, 2009, and is available via a webcast on www.costco.com (click on Investor Relations and "Webcasts").

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, conditions affecting the acquisition, development, ownership or use of real estate, actions of vendors, rising costs associated with employees (including health care and workers' compensation costs), rising costs associated with the acquisition of merchandise (including the direct and indirect effects of the rising cost of petroleum-based products and fuel and energy costs), geopolitical conditions and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission.

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                      COSTCO WHOLESALE CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                             (unaudited)


                              12 Weeks Ended            36 Weeks Ended
                        ------------------------  ------------------------
                       May 10, 2009 May 11, 2008 May 10, 2009 May 11, 2008
                        -----------  -----------  -----------  -----------
REVENUE
 Net sales              $15,477,445  $16,262,793  $48,001,528  $48,351,255
 Membership fees            328,448      350,924    1,042,796    1,031,878
                        -----------  -----------  -----------  -----------
  Total revenue          15,805,893   16,613,717   49,044,324   49,383,133
OPERATING EXPENSES
 Merchandise costs       13,775,988   14,548,022   42,822,761   43,204,722
 Selling, general and
  administrative          1,654,943    1,582,488    4,998,447    4,767,613
 Preopening expenses          9,280        8,427       29,392       39,618
 Provision for impaired
  assets and closing
  costs, net                  6,562        9,205       14,514        6,419
                        -----------  -----------  -----------  -----------
   Operating income         359,120      465,575    1,179,210    1,364,761
OTHER INCOME (EXPENSE)
 Interest expense           (25,168)     (24,140)     (74,954)     (70,579)
 Interest income and
  other                       4,156       23,888       30,174       97,769
                        -----------  -----------  -----------  -----------
INCOME BEFORE INCOME TAXES  338,108      465,323    1,134,430    1,391,951
 Provision for income
  taxes                     128,516      170,257      422,598      507,054
                        -----------  -----------  -----------  -----------
NET INCOME              $   209,592  $   295,066  $   711,832  $   884,897
                        ===========  ===========  ===========  ===========

NET INCOME PER COMMON
 SHARE:
  Basic                 $      0.48  $      0.68  $      1.64  $      2.04
                        ===========  ===========  ===========  ===========
  Diluted               $      0.48  $      0.67  $      1.62  $      1.99
                        ===========  ===========  ===========  ===========

Shares used in
 calculation (000's)
  Basic                     434,354      433,678      433,426      434,515
  Diluted                   439,997      443,281      439,995      444,379

Dividends per share     $      0.18  $      0.16  $      0.50  $      0.45

 
CONTACTS:
Costco Wholesale Corporation
Richard Galanti, 425/313-8203
Bob Nelson, 425/313-8255
Jeff Elliott, 425/313-8264