Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal 2015 and February Sales Results

ISSAQUAH, WA -- (Marketwired) -- 03/05/15 -- Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) announced today its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2015, ended February 15, 2015.

Net sales for the quarter increased four percent, to $26.87 billion, from $25.76 billion last year. Net sales for the first half increased six percent, to $53.16 billion, from $50.22 billion last year.

Comparable sales for the twelve-week and twenty-four-week periods were as follows:

                                                    12 Weeks      24 Weeks
                                                  ------------  ------------
U.S.                                                   4%            5%
International                                          -2%           -1%

Total                                                  2%            3%
                                                  ============  ============

Comparable sales for these periods, excluding negative impacts from gasoline price deflation and foreign exchange, were as follows:

                                                    12 Weeks      24 Weeks
                                                  ------------  ------------
U.S.                                                   8%            8%
International                                          8%            7%

Total                                                  8%            7%
                                                  ============  ============

Net income for the quarter was $598 million, or $1.35 per diluted share, compared to $463 million, or $1.05 per diluted share, last year. Net income for the first half was $1,094 million, or $2.47 per diluted share, compared to $888 million, or $2.01 per diluted share, last year.

According to Richard Galanti, Chief Financial Officer: "Net income was positively impacted by a $57 million ($0.13 per diluted share) tax benefit in connection with February's special cash dividend to the extent received by the Company 401(k) plan participants. In addition, this quarter's net income was negatively impacted by a $14 million ($0.03 per diluted share) tax charge relating to an ongoing income tax matter."

For the four-week reporting month of February ended March 1, 2015, the Company reported net sales of $8.18 billion, an increase of four percent from $7.90 billion during the similar four-week period last year. For the twenty-six week year-to-date period ended March 1, 2015, net sales were $57.19 billion, an increase of five percent from $54.22 billion during the similar twenty-six week period last year.

Comparable sales for the four-week and twenty-six-week periods ended March 1, 2015 were as follows:

                                                     4 Weeks      26 Weeks
                                                  ------------  ------------
U.S.                                                   2%            5%
International                                          0%            -1%

Total                                                  1%            3%
                                                  ============  ============

Comparable sales for these periods, excluding the negative impacts from gasoline price deflation and foreign exchange, were as follows:

                                                     4 Weeks      26 Weeks
                                                  ------------  ------------
U.S.                                                   7%            7%
International                                          12%           8%

Total                                                  8%            7%
                                                  ============  ============

Costco currently operates 671 warehouses, including 474 in the United States and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom and Mexico.

A conference call to discuss these second quarter operating results and February sales results is scheduled for 8:00 a.m. (PT) today, March 5, 2015, and is available via a webcast on www.costco.com (click on Investor Relations and "Play Webcast").

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, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (including health care costs), energy and certain commodities, 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. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements, except as required by law.

                        COSTCO WHOLESALE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (dollars in millions, except per share data)
                                 (unaudited)

                           12 Weeks Ended              24 Weeks Ended
                     --------------------------  --------------------------
                     February 15,  February 16,  February 15,  February 16,
                         2015          2014          2015          2014
                     ------------  ------------  ------------  ------------
REVENUE
  Net sales          $     26,872  $     25,756  $     53,156  $     50,224
  Membership fees             582           550         1,164         1,099
                     ------------  ------------  ------------  ------------
    Total revenue          27,454        26,306        54,320        51,323
OPERATING EXPENSES
  Merchandise costs        23,897        23,043        47,282        44,867
  Selling, general
   and
   administrative           2,671         2,531         5,367         5,032
  Preopening
   expenses                     9             8            24            32
                     ------------  ------------  ------------  ------------
    Operating income          877           724         1,647         1,392
OTHER INCOME
 (EXPENSE)
  Interest expense            (27)          (26)          (53)          (53)
  Interest income
   and other, net              20            30            55            48
                     ------------  ------------  ------------  ------------
INCOME BEFORE INCOME
 TAXES                        870           728         1,649         1,387
  Provision for
   income taxes               263           255           537           483
                     ------------  ------------  ------------  ------------
Net income including
 noncontrolling
 interests                    607           473         1,112           904
Net income
 attributable to
 noncontrolling
 interests                     (9)          (10)          (18)          (16)
                     ------------  ------------  ------------  ------------
NET INCOME
 ATTRIBUTABLE TO
 COSTCO              $        598  $        463  $      1,094  $        888
                     ============  ============  ============  ============

NET INCOME PER
 COMMON SHARE
 ATTRIBUTABLE TO
 COSTCO:
  Basic              $       1.36  $       1.05  $       2.49  $       2.02
                     ============  ============  ============  ============
  Diluted            $       1.35  $       1.05  $       2.47  $       2.01
                     ============  ============  ============  ============

Shares used in
 calculation (000's)
  Basic                   440,384       439,776       439,567       438,868
  Diluted                 442,896       442,829       442,522       442,627



Cash dividends
 declared per common
 share               $      5.355  $       0.31  $      5.710  $       0.62


                        COSTCO WHOLESALE CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (dollars in millions)
                                 (unaudited)
Subject to Reclassifications

                                                 February 15,    August 31,
                                                      2015          2014
                                                 ------------- -------------
                     ASSETS
Cash and cash equivalents                        $       5,866 $       5,738
Short-term investments                                   1,587         1,577
Receivables, net                                         1,287         1,148
Merchandise inventories                                  8,558         8,456
Deferred income taxes and other current assets             760           669
                                                 ------------- -------------
  Total current assets                                  18,058        17,588
Property and equipment, net                             14,872        14,830
Other assets                                               670           606
                                                 ------------- -------------
TOTAL ASSETS                                     $      33,600 $      33,024
                                                 ============= =============

             LIABILITIES AND EQUITY

Accounts payable                                 $       8,302 $       8,491
Accrued salaries and benefits                            2,391         2,231
Deferred membership fees                                 1,318         1,254
Other current liabilities                                6,238         2,436
                                                 ------------- -------------
  Total current liabilities                             18,249        14,412
Long-term debt, excluding current portion                3,830         5,093
Deferred income taxes and other liabilities              1,096         1,004
                                                 ------------- -------------
  Total liabilities                                     23,175        20,509
                                                 ------------- -------------

Total Costco stockholders' equity                       10,206        12,303
Noncontrolling interests                                   219           212
                                                 ------------- -------------
  Total equity                                          10,425        12,515
                                                 ------------- -------------
TOTAL LIABILITIES AND EQUITY                     $      33,600 $      33,024
                                                 ============= =============

CONTACTS: 

Costco Wholesale Corporation

Richard Galanti
425/313-8203

Bob Nelson
425/313-8255

Jeff Elliott
425/313-8264

Source: Costco

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