UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May 7, 2023~~February 18, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-20355

Costco Wholesale Corporation

(Exact name of registrant as specified in its charter)


Washington						91-1223280
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

999 Lake Drive, Issaquah, WA 98027

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code): (425) 313-8100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $.005 Par Value

COST

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer's common stock as of ~~May 24, 2023~~March 6, 2024 was ~~443,148,481.~~443,504,036.

Table of Contents

COSTCO WHOLESALE CORPORATION

INDEX TO FORM 10-Q


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2726
Item 4.	Controls and Procedures	27

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	2827
Item 1A.	Risk Factors	2827
Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	2827
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	2928
	Signatures	3029

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(amounts in millions, except per share data) (unaudited)


		12 Weeks Ended				36 Weeks Ended
		May 7, 2023		May 8, 2022		May 7, 2023		May 8, 2022
	12 Weeks Ended										12 Weeks Ended			24 Weeks Ended
	February 18, 2024									February 18, 2024		February 12, 2023	February 18, 2024		February 12, 2023
REVENUE	REVENUE
Net sales
Net sales
Net sales	Net sales	$	52,604	$	51,612	$	160,280	$	151,966
Membership fees	Membership fees	1,044		984		3,071		2,897
Total revenue	Total revenue	53,648		52,596		163,351		154,863
OPERATING EXPENSES	OPERATING EXPENSES
Merchandise costs	Merchandise costs	47,175		46,355		143,367		135,824
Merchandise costs
Merchandise costs
Selling, general and administrative	Selling, general and administrative	4,794		4,450		14,651		13,743
Operating income	Operating income	1,679		1,791		5,333		5,296
OTHER INCOME (EXPENSE)	OTHER INCOME (EXPENSE)
Interest expense	Interest expense	(36)		(35)		(104)		(110)
Interest expense
Interest expense
Interest income and other, net	Interest income and other, net	128		71		295		138
INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	1,771		1,827		5,524		5,324
Provision for income taxes	Provision for income taxes	469		455		1,392		1,287
Net income including noncontrolling interests		1,302		1,372		4,132		4,037
Net income attributable to noncontrolling interests		—		(19)		—		(61)
NET INCOME ATTRIBUTABLE TO COSTCO		$	1,302	$	1,353	$	4,132	$	3,976
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:

NET INCOME

NET INCOME

NET INCOME
NET INCOME PER COMMON SHARE:
Basic
Basic
Basic	Basic	$	2.94	$	3.05	$	9.31	$	8.96
Diluted	Diluted	$	2.93	$	3.04	$	9.30	$	8.94
Shares used in calculation (000s):	Shares used in calculation (000s):
Basic	Basic	443,814		443,700		443,843		443,567
Basic
Basic
Diluted	Diluted	444,360		444,886		444,455		444,802

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(amounts in millions) (unaudited)

12 Weeks Ended 36 Weeks Ended
May 7,
2023 May 8,
2022 May 7,
2023 May 8,
2022
NET INCOME INCLUDING NONCONTROLLING INTERESTS $ 1,302 $ 1,372 $ 4,132 $ 4,037
Foreign-currency translation adjustment and other, net (8) (388) 149 (495)
Comprehensive income 1,294 984 4,281 3,542
Less: Comprehensive (loss) income attributable to noncontrolling interests — (13) — 31
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO $ 1,294 $ 997 $ 4,281 $ 3,511


	12 Weeks Ended				24 Weeks Ended
	February 18, 2024		February 12, 2023		February 18, 2024		February 12, 2023
NET INCOME	$	1,743	$	1,466	$	3,332	$	2,830
Foreign-currency translation adjustment and other, net	1		253		(37)		157


COMPREHENSIVE INCOME	$	1,744	$	1,719	$	3,295	$	2,987

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in millions, except par value and share data) (unaudited)


		May 7, 2023		August 28, 2022		February 18, 2024	September 3, 2023
ASSETS	ASSETS
CURRENT ASSETS	CURRENT ASSETS
CURRENT ASSETS
CURRENT ASSETS
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	12,493	$	10,203
Short-term investments	Short-term investments	1,215		846
Receivables, net	Receivables, net	2,502		2,241
Merchandise inventories	Merchandise inventories	16,324		17,907
Other current assets	Other current assets	1,755		1,499
Total current assets	Total current assets	34,289		32,696
OTHER ASSETS	OTHER ASSETS
Property and equipment, net	Property and equipment, net	25,931		24,646
Property and equipment, net
Property and equipment, net
Operating lease right-of-use assets	Operating lease right-of-use assets	2,806		2,774
Other long-term assets	Other long-term assets	3,726		4,050
TOTAL ASSETS	TOTAL ASSETS	$	66,752	$	64,166
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES
CURRENT LIABILITIES
CURRENT LIABILITIES
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	16,853	$	17,848
Accrued salaries and benefits	Accrued salaries and benefits	4,117		4,381
Accrued member rewards	Accrued member rewards	2,076		1,911
Deferred membership fees	Deferred membership fees	2,436		2,174
Current portion of long-term debt	Current portion of long-term debt	—		73
Other current liabilities	Other current liabilities	6,226		5,611
Total current liabilities	Total current liabilities	31,708		31,998
OTHER LIABILITIES	OTHER LIABILITIES
Long-term debt, excluding current portion	Long-term debt, excluding current portion	6,497		6,484
Long-term debt, excluding current portion
Long-term debt, excluding current portion
Long-term operating lease liabilities	Long-term operating lease liabilities	2,507		2,482
Other long-term liabilities	Other long-term liabilities	2,467		2,555
TOTAL LIABILITIES	TOTAL LIABILITIES	43,179		43,519
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES
EQUITY	EQUITY
EQUITY
EQUITY
Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding	Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock $0.005 par value; 900,000,000 shares authorized; 443,222,000 and 442,664,000 shares issued and outstanding		2		2
Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding
Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding
Common stock $0.005 par value; 900,000,000 shares authorized; 443,549,000 and 442,793,000 shares issued and outstanding
Additional paid-in capital	Additional paid-in capital	7,211		6,884
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,680)		(1,829)
Retained earnings	Retained earnings	18,035		15,585
Total Costco stockholders’ equity		23,568		20,642
Noncontrolling interests		5		5

TOTAL EQUITY

TOTAL EQUITY

TOTAL EQUITY	TOTAL EQUITY	23,573		20,647
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	66,752	$	64,166

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(amounts in millions) (unaudited)


	12 Weeks Ended February 18, 2024																						12 Weeks Ended February 18, 2024
																		Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Costco Stockholders’ Equity		Noncontrolling Interests	Total Equity
		12 Weeks Ended May 7, 2023
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Costco Stockholders’ Equity		Noncontrolling Interests		Total Equity
		Shares (000s)	Amount
BALANCE AT FEBRUARY 12, 2023		443,550	$	2	$	7,123	$	(1,672)	$	17,341	$	22,794	$	5	$	22,799
BALANCE AT NOVEMBER 26, 2023
BALANCE AT NOVEMBER 26, 2023
BALANCE AT NOVEMBER 26, 2023
Net income	Net income	—	—		—		—		1,302		1,302		—		1,302
Foreign-currency translation adjustment and other, net	Foreign-currency translation adjustment and other, net	—	—		—		(8)		—		(8)		—		(8)
Stock-based compensation	Stock-based compensation	—	—		94		—		—		94		—		94
Release of vested restricted stock units (RSUs), including tax effects	Release of vested restricted stock units (RSUs), including tax effects	1	—		—		—		—		—		—		—
Repurchases of common stock	Repurchases of common stock	(329)	—		(6)		—		(156)		(162)		—		(162)
Cash dividend declared		—	—		—		—		(452)		(452)		—		(452)
BALANCE AT MAY 7, 2023		443,222	$	2	$	7,211	$	(1,680)	$	18,035	$	23,568	$	5	$	23,573
Cash dividend declared and other
BALANCE AT FEBRUARY 18, 2024

		12 Weeks Ended May 8, 2022
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Costco Stockholders’ Equity		Noncontrolling Interests		Total Equity
		Shares (000s)	Amount														12 Weeks Ended February 12, 2023
BALANCE AT FEBRUARY 13, 2022		443,279	$	4	$	7,186	$	(1,246)	$	13,474	$	19,418	$	558	$	19,976
																		Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Costco Stockholders’ Equity		Noncontrolling Interests	Total Equity

BALANCE AT NOVEMBER 20, 2022
BALANCE AT NOVEMBER 20, 2022
BALANCE AT NOVEMBER 20, 2022
Net income	Net income	—	—		—		—		1,353		1,353		19		1,372
Foreign-currency translation adjustment and other, net	Foreign-currency translation adjustment and other, net	—	—		—		(356)		—		(356)		(32)		(388)
Stock-based compensation	Stock-based compensation	—	—		91		—		—		91		—		91
Release of vested RSUs, including tax effects	Release of vested RSUs, including tax effects	4	—		(1)		—		—		(1)		—		(1)
Repurchases of common stock	Repurchases of common stock	(254)	—		(4)		—		(135)		(139)		—		(139)
Cash dividend declared	Cash dividend declared	—	—		—		—		(398)		(398)		—		(398)
BALANCE AT MAY 8, 2022		443,029	$	4	$	7,272	$	(1,602)	$	14,294	$	19,968	$	545	$	20,513
BALANCE AT FEBRUARY 12, 2023

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(amounts in millions) (unaudited)


	24 Weeks Ended February 18, 2024																						24 Weeks Ended February 18, 2024
																		Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Costco Stockholders’ Equity		Noncontrolling Interests	Total Equity

BALANCE AT SEPTEMBER 3, 2023
BALANCE AT SEPTEMBER 3, 2023
BALANCE AT SEPTEMBER 3, 2023
Net income
Foreign-currency translation adjustment and other, net
Stock-based compensation
Release of vested restricted stock units (RSUs), including tax effects
Repurchases of common stock
Cash dividends declared and other
BALANCE AT FEBRUARY 18, 2024



		36 Weeks Ended May 7, 2023															24 Weeks Ended February 12, 2023
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Costco Stockholders’ Equity		Noncontrolling Interests		Total Equity			Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Costco Stockholders’ Equity		Noncontrolling Interests	Total Equity
		Shares (000s)	Amount
BALANCE AT AUGUST 28, 2022	BALANCE AT AUGUST 28, 2022	442,664	$	2	$	6,884	$	(1,829)	$	15,585	$	20,642	$	5	$	20,647
Net income		—	—		—		—		4,132		4,132		—		4,132
Foreign-currency translation adjustment and other, net		—	—		—		149		—		149		—		149
Stock-based compensation		—	—		645		—		—		645		—		645
Release of vested restricted stock units (RSUs), including tax effects		1,466	—		(302)		—		—		(302)		—		(302)
Repurchases of common stock		(908)	—		(16)		—		(431)		(447)		—		(447)
Cash dividends declared		—	—		—		—		(1,251)		(1,251)		—		(1,251)
BALANCE AT MAY 7, 2023		443,222	$	2	$	7,211	$	(1,680)	$	18,035	$	23,568	$	5	$	23,573

		36 Weeks Ended May 8, 2022
		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Costco Stockholders’ Equity		Noncontrolling Interests		Total Equity
		Shares (000s)	Amount
BALANCE AT AUGUST 29, 2021		441,825	$	4	$	7,031	$	(1,137)	$	11,666	$	17,564	$	514	$	18,078
BALANCE AT AUGUST 28, 2022
BALANCE AT AUGUST 28, 2022
Net income	Net income	—	—		—		—		3,976		3,976		61		4,037
Foreign-currency translation adjustment and other, net	Foreign-currency translation adjustment and other, net	—	—		—		(465)		—		(465)		(30)		(495)
Stock-based compensation	Stock-based compensation	—	—		609		—		—		609		—		609
Release of vested RSUs, including tax effects	Release of vested RSUs, including tax effects	1,694	—		(360)		—		—		(360)		—		(360)
Repurchases of common stock	Repurchases of common stock	(490)	—		(8)		—		(249)		(257)		—		(257)
Cash dividends declared	Cash dividends declared	—	—		—		—		(1,099)		(1,099)		—		(1,099)
BALANCE AT MAY 8, 2022		443,029	$	4	$	7,272	$	(1,602)	$	14,294	$	19,968	$	545	$	20,513
BALANCE AT FEBRUARY 12, 2023

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in millions) (unaudited)


		36 Weeks Ended
		May 7, 2023		May 8, 2022
	24 Weeks Ended						24 Weeks Ended
	February 18, 2024					February 18, 2024		February 12, 2023
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests		$	4,132	$	4,037
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	1,389		1,299
Non-cash lease expense	Non-cash lease expense	300		240
Stock-based compensation	Stock-based compensation	643		606
Other non-cash operating activities, net		72		(62)
Impairment of assets		391		118
Deferred income taxes		(22)		(2)
Impairment of assets and other non-cash operating activities, net
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
Merchandise inventories
Merchandise inventories
Merchandise inventories	Merchandise inventories	1,596		(3,633)
Accounts payable	Accounts payable	(872)		1,766
Other operating assets and liabilities, net	Other operating assets and liabilities, net	(286)		517
Net cash provided by operating activities	Net cash provided by operating activities	7,343		4,886
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments
Purchases of short-term investments
Purchases of short-term investments	Purchases of short-term investments	(947)		(588)
Maturities of short-term investments	Maturities of short-term investments	594		840
Additions to property and equipment	Additions to property and equipment	(2,767)		(2,632)
Other investing activities, net	Other investing activities, net	(27)		(48)
Net cash used in investing activities	Net cash used in investing activities	(3,147)		(2,428)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings	Repayments of short-term borrowings	(698)		(195)
Repayments of short-term borrowings
Repayments of short-term borrowings
Proceeds from short-term borrowings	Proceeds from short-term borrowings	667		175
Repayments of long-term borrowings		(75)		(800)
Proceeds from issuance of long-term debt
Tax withholdings on stock-based awards	Tax withholdings on stock-based awards	(302)		(360)
Repurchases of common stock	Repurchases of common stock	(446)		(254)
Cash dividend payments	Cash dividend payments	(799)		(701)
Financing lease payments
Other financing activities, net	Other financing activities, net	(297)		(208)
Net cash used in financing activities	Net cash used in financing activities	(1,950)		(2,343)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	44		(180)
Net increase (decrease) in cash and cash equivalents		2,290		(65)
Net increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR	CASH AND CASH EQUIVALENTS BEGINNING OF YEAR	10,203		11,258
CASH AND CASH EQUIVALENTS END OF PERIOD	CASH AND CASH EQUIVALENTS END OF PERIOD	$	12,493	$	11,193

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the first thirty-six weeks of the year for:
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the first half of the year for:
Cash paid during the first half of the year for:
Cash paid during the first half of the year for:
Interest
Interest
Interest	Interest	$	86	$	102
Income taxes, net	Income taxes, net	$	1,443	$	1,121
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:	SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Cash dividend declared, but not yet paid	Cash dividend declared, but not yet paid	$	452	$	398
Cash dividend declared, but not yet paid
Cash dividend declared, but not yet paid
Financing lease assets obtained in exchange for new or modified leases	Financing lease assets obtained in exchange for new or modified leases	$	101	$	631
Operating lease assets obtained in exchange for new or modified leases	Operating lease assets obtained in exchange for new or modified leases	$	160	$	67
Capital expenditures included in liabilities

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in millions, except share, per share, and warehouse count data)

(unaudited)

Note 1—Summary of Significant Accounting Policies

Description of Business

Costco Wholesale Corporation (Costco or the Company), a Washington corporation, and its subsidiaries operate membership warehouses based on the concept that offering members low prices on a limited selection of nationally-branded and private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover. At ~~May 7, 2023,~~February 18, 2024, Costco operated ~~852~~874 warehouses worldwide: ~~586~~602 in the United States (U.S.) located in 4647 states, Washington, D.C., and Puerto Rico, ~~107~~108 in Canada, 40 in Mexico, 3233 in Japan, 29 in the United Kingdom (U.K.), 18 in Korea, 1415 in Australia,14 in Taiwan, 14six in ~~Australia,~~China, four in Spain, ~~three in China,~~ two in France, and one each in Iceland, New Zealand, and Sweden. The Company operates e-commerce websites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia.

Basis of Presentation

The condensed consolidated financial statements include the accounts of Costco and its wholly-owned ~~subsidiaries, and a subsidiary in which it has a controlling interest.~~subsidiaries. All material inter-company transactions among the Company and its consolidated subsidiaries have been eliminated in consolidation. ~~Unless otherwise noted, references to net income relate to net income attributable to Costco.~~

These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended ~~August 28, 2022.~~September 3, 2023.

Fiscal Year End

The Company operates on a 52/53 week fiscal year basis, with the fiscal year ending on the Sunday closest to August 31. Fiscal ~~2023~~2024 is a ~~53-week~~52-week year ending on September ~~3, 2023.~~1, 2024. References to the ~~third~~second quarter of ~~2023~~2024 and ~~2022~~2023 relate to the 12-week fiscal quarters ended ~~May 7, 2023,~~February 18, 2024, and ~~May 8, 2022.~~February 12, 2023. References to the first ~~thirty-six weeks~~half of ~~2023~~2024 and ~~2022~~2023 relate to the 3624 weeks ended ~~May 7, 2023,~~February 18, 2024 and ~~May 8, 2022.~~February 12, 2023.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable. Actual results could differ from those estimates and assumptions.

~~Table of Contents~~

Reclassification

Reclassifications were made to the condensed consolidated statement of cash flows for the first ~~thirty-six weeks~~half of ~~2022~~fiscal 2023 to conform with current year presentation.

~~Leases~~

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Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company ~~leases land, buildings, equipment,~~is evaluating the new standard.

In December 2023, the FASB issued ASU 2023-09, which focuses on income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, provide information for reconciling items that meet a quantitative threshold, and ~~other assets at warehouses, offices, or within the operations that support supply chain and distribution channels.~~certain information about income taxes paid. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company ~~reviews lease right-of-use assets for impairment when events or changes in circumstances indicate that~~is evaluating the carrying amount of the asset group may not be fully recoverable. The Company also occasionally revisits and modifies the terms of its leasing arrangements. During the first quarter and third quarter of 2023, the Company recognized charges of $93 and $298, primarily related to the impairment of certain leased assets associated with charter shipping activities. This charge is included in merchandise costs.new standard.

Note 2—Investments

The Company's investments were as follows:

May 7, 2023:

Cost
Basis

Unrealized
Losses, Net

Recorded
Basis

February 18, 2024:

Cost
Basis

Unrealized
Losses, Net

Recorded
Basis

Available-for-sale:

Government and agency securities

602

(2)

600

Held-to-maturity:

Certificates of deposit

615

—

615

Total short-term investments

1,217

(2)

1,215

Total short-term investments

August 28, 2022:

Cost
Basis

Unrealized
Losses, Net

Recorded
Basis

September 3, 2023:

Cost
Basis

Unrealized
Losses, Net

Recorded
Basis

Available-for-sale:

Government and agency securities

534

(5)

529

Held-to-maturity:

Certificates of deposit

317

—

317

Certificates of deposit

Total short-term investments

851

(5)

846

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended ~~May 7,~~February 18, 2024, or September 3, 2023 ~~and August 28, 2022~~. At those dates, there were no available-for-sale securities in a material continuous unrealized-loss position. There were no sales of available-for-sale securities during the first ~~thirty-six weeks~~half of ~~2023~~2024 or ~~2022.~~2023.

The maturities of available-for-sale and held-to-maturity securities at ~~May 7, 2023~~February 18, 2024, are as follows:

Available-For-Sale Held-To-Maturity
Cost Basis Fair Value
Due in one year or less $ 126 $ 125 $ 615
Due after one year through five years 324 324 —
Due after five years 152 151 —
Total $ 602 $ 600 $ 615


	Available-For-Sale				Held-To-Maturity
	Cost Basis		Fair Value
Due in one year or less	$	136	$	135	$	561
Due after one year through five years	370		365		—
Due after five years	172		165		—
Total	$	678	$	665	$	561

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Note 3—Fair Value Measurement

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below presents information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis and indicates the level within the ~~fair-value~~ hierarchy reflecting the valuation techniques utilized.

Level 2
May 7,
2023 August 28,
2022
Investment in government and agency securities $ 600 $ 529
Forward foreign-exchange contracts, in asset position(1)
6 34
Forward foreign-exchange contracts, in (liability) position(1)
(11) (2)
Total $ 595 $ 561


	Level 2
	February 18, 2024		September 3, 2023
Investment in government and agency securities(1)	$	669	$	633
Forward foreign-exchange contracts, in asset position(2)	12		18
Forward foreign-exchange contracts, in (liability) position(2)	(4)		(7)
Total	$	677	$	644

_______________

(1)At February 18, 2024, $4 cash and cash equivalents and $665 short-term investments are included in the accompanying condensed consolidated balance sheets.

(2)The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets.

At ~~May 7,~~February 18, 2024, and September 3, 2023, ~~and August 28, 2022,~~ the Company did not hold any Level 1 or 3 financial assets or liabilities that were measured at fair value on a recurring basis. There were no transfers between levels during the first ~~thirty-six weeks~~half of ~~2023~~2024 or ~~2022.~~2023.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized and disclosed at fair value on a nonrecurring basis include items such as financial assets measured at amortized cost and long-lived nonfinancial assets. These assets are measured at fair value if determined to be impaired. ~~Please see~~ ~~Note 1~~ ~~for additional information.~~There were no material fair value adjustments to these items during the first half of 2024. During the first quarter of 2023, the Company recognized in merchandise costs a charge of $93, primarily related to the impairment of certain leased assets associated with charter shipping activities, now discontinued.

Note 4—Debt

The carrying value of the Company’s long-term debt consisted of the following:


		May 7, 2023		August 28, 2022
	February 18, 2024					February 18, 2024	September 3, 2023
2.750% Senior Notes due May 2024	2.750% Senior Notes due May 2024	$	1,000	$	1,000
3.000% Senior Notes due May 2027	3.000% Senior Notes due May 2027	1,000		1,000
1.375% Senior Notes due June 2027	1.375% Senior Notes due June 2027	1,250		1,250
1.600% Senior Notes due April 2030	1.600% Senior Notes due April 2030	1,750		1,750
1.750% Senior Notes due April 2032	1.750% Senior Notes due April 2032	1,000		1,000
Other long-term debt	Other long-term debt	525		590
Total long-term debt	Total long-term debt	6,525		6,590
Less unamortized debt discounts and issuance costs	Less unamortized debt discounts and issuance costs	28		33
Less current portion(1)	Less current portion(1)	—		73
Long-term debt, excluding current portion	Long-term debt, excluding current portion	$	6,497	$	6,484

_______________

(1)Net of unamortized debt discounts and issuance costs.

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The fair value of the Senior Notes is estimated using Level 2 inputs. Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japan subsidiary, valued using Level 3 inputs. In November 2023, the Company's Japan subsidiary issued four Guaranteed Senior Notes, totaling approximately $500, at fixed interest rates ranging from 1.400% to 2.120%. Interest is payable semi-annually, and maturity dates range from November 7, 2033, to November 7, 2043. The fair value of the Company's long-term debt, including the current portion, was approximately ~~$5,907~~$6,306 and ~~$6,033~~$5,738 at ~~May 7, 2023,~~February 18, 2024, and ~~August 28, 2022.~~September 3, 2023.

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Note 5—Equity

Dividends

A quarterly cash dividend of $1.02 per share was declared on ~~April 19, 2023~~January 18, 2024, and paid on ~~May 19, 2023.~~February 16, 2024. The ~~Company's quarterly~~ dividend was $0.90 per share in the ~~third~~ secondquarter of ~~2022 and dividends totaled $2.82 and $2.48~~2023. On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special cash dividend of $15.00 per share, ~~in the first thirty-six weeks of 2023 and 2022.~~declared on December 13, 2023.

~~Share~~Stock Repurchase ~~Program~~Programs

The Company's ~~share~~stock repurchase program is conducted under a $4,000 authorization by the Board of Directors, which expires in January 2027. At ~~May 7, 2023,~~February 18, 2024, the remaining amount available under the program was ~~$3,793.~~$3,241. The following table summarizes the ~~Company's stock~~ repurchase activity:

Shares Repurchased (000s) Average Price per Share Total Cost
Third quarter of 2023 329 $ 492.71 $ 162
First thirty-six weeks of 2023 908 $ 492.30 $ 447
Third quarter of 2022 254 $ 547.38 $ 139
First thirty-six weeks of 2022 490 $ 523.61 $ 257


	Shares Repurchased (000s)	Average Price per Share		Total Cost
Second quarter of 2024	240	$	664.02	$	160
First half of 2024	528	$	609.51	$	322

Second quarter of 2023	294	$	488.30	$	144
First half of 2023	579	$	492.06	$	285

These amounts may differ from the accompanying condensed consolidated statements of cash flows due to changes in unsettled stock repurchases at the end of each quarter. Purchases are made from time to time, as conditions warrant, in the open market or in block purchases and pursuant to plans under SEC Rule 10b5-1.

Note 6—Stock-Based Compensation

The 2019 Incentive Plan authorized the issuance of ~~17,500,000 shares (10,000,000 RSUs) of common stock for future grants, plus the remaining shares that were available for grant and the future forfeited shares from grants under the previous plan,~~ up to a maximum of ~~27,800,000 shares (15,885,000 RSUs).~~15,885,000 RSUs. To preserve the value of outstanding awards, the number of RSUs that may be granted under this Plan is subject to adjustments from changes in capital structure. The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes.

As required by the 2019 Incentive Plan, in conjunction with the 2024 special cash dividend, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value. They were adjusted by multiplying the number of outstanding shares by a factor of 1.018, representing the ratio of the Nasdaq closing price of $674.62 on December 26, 2023, which was the last trading day immediately prior to the ex-dividend date, to the Nasdaq opening price of $662.70 on the ex-dividend date, December 27, 2023. The outstanding RSUs increased by approximately 52,000. The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not change. As further required by the 2019 Incentive Plan, the maximum number of shares issuable under the plan was proportionally adjusted, which resulted in an additional 128,000 RSU shares available to be granted.

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Summary of Restricted Stock Unit Activity

At ~~May 7, 2023, 8,724,000~~February 18, 2024, 7,249,000 shares were available to be granted as RSUs, and the following awards, adjusted for the effects of the special dividend, were outstanding:

•~~2,898,000~~2,749,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of a long-service term;

•~~41,000~~70,000 performance-based RSUs granted to executive officers of the Company, for which the performance targets have been met. The awards vest upon continued employment over specified periods of time and upon achievement of a long-service term; and

•~~135,000~~91,000 performance-based RSUs granted to executive officers of the Company, subject to achievement of performance targets for ~~fiscal 2023,~~2024, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are included in the table below. The Company recognized compensation expense for these awards in the ~~third~~second quarter of ~~2023,~~2024, as it is currently deemed probable that the targets will be achieved.

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The following table summarizes RSU transactions during the first ~~thirty-six weeks~~half of ~~2023:~~2024:


		Number of Units (in 000s)	Weighted-Average Grant Date Fair Value
Outstanding at August 28, 2022		3,449	$	338.41
	Number of Units (in 000s)						Number of Units (in 000s)		Weighted-Average Grant Date Fair Value
Outstanding at September 3, 2023
Granted	Granted	1,814	471.47
Vested and delivered	Vested and delivered	(2,096)	352.56
Forfeited	Forfeited	(93)	396.50
Outstanding at May 7, 2023		3,074	$	405.51
Special cash dividend					Special cash dividend	52		N/A
Outstanding at February 18, 2024

The remaining unrecognized compensation cost related to RSUs unvested at ~~May 7, 2023,~~February 18, 2024, was ~~$930,~~$1,098, and the weighted-average period over which this cost will be recognized is ~~1.7~~1.8 years.

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits:


		12 Weeks Ended				36 Weeks Ended
		May 7, 2023		May 8, 2022		May 7, 2023		May 8, 2022
	12 Weeks Ended										12 Weeks Ended			24 Weeks Ended
	February 18, 2024									February 18, 2024		February 12, 2023	February 18, 2024		February 12, 2023
Stock-based compensation expense	Stock-based compensation expense	$	94	$	90	$	643	$	606
Less recognized income tax benefits	Less recognized income tax benefits	21		20		134		128
Stock-based compensation expense, net	Stock-based compensation expense, net	$	73	$	70	$	509	$	478

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Note 7—Net Income per Common and Common Equivalent Share

The following table shows the amounts used in computing net income per share and the weighted average number of shares of basic and of potentially dilutive common shares outstanding (shares in 000s):


		12 Weeks Ended				36 Weeks Ended
		May 7, 2023		May 8, 2022		May 7, 2023		May 8, 2022
Net income attributable to Costco		$	1,302	$	1,353	$	4,132	$	3,976
	12 Weeks Ended										12 Weeks Ended			24 Weeks Ended
	February 18, 2024									February 18, 2024		February 12, 2023	February 18, 2024		February 12, 2023
Net income
Weighted average basic shares	Weighted average basic shares	443,814		443,700		443,843		443,567
RSUs	RSUs	546		1,186		612		1,235
Weighted average diluted shares	Weighted average diluted shares	444,360		444,886		444,455		444,802

Anti-dilutive RSUs

Anti-dilutive shares are excluded from the calculation of diluted shares and earnings per diluted share because their impact would increase earnings per diluted shares.

~~Table~~Basic earnings per share is calculated by dividing net income by the weighted average number of ~~Contents~~shares of common stock outstanding during the period. Diluted earnings per share is calculated based on the dilutive effect of RSUs using the treasury stock method.

Note 8—Commitments and Contingencies

LegalProceedings

The Company is involved in ~~a number of~~many claims, proceedings and litigations arising from its business and property ownership. In accordance with applicable accounting guidance, the Company establishes an accrual for legal proceedings if and when those matters present loss contingencies that are both probable and reasonably estimable. There may be ~~exposure to loss~~losses in excess of amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss (taking into account where applicable indemnification arrangements concerning suppliers and insurers) and the accrued amount, if any, thereof, and adjusts the amount as appropriate. The Company has recorded immaterial accruals with respect to certain matters described below, in addition to other immaterial accruals for matters not described below. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but ~~will monitor the matter~~monitors for developments that ~~will~~ make the contingency both probable and reasonably estimable. In each case, there is a reasonable possibility that a loss may be incurred, including a loss in excess of the applicable accrual. For matters where no accrual has been recorded, the possible loss or range of loss (including any loss in excess of the accrual) cannot, in the Company's view, be reasonably estimated because, among other things: ~~(i)~~ the remedies or penalties sought are indeterminate or unspecified; ~~(ii)~~ the legal and/or factual theories are not well developed; and/or ~~(iii)~~ the matters involve complex or novel legal theories or a large number of parties.

~~The Company is~~In November 2023, a defendant in an action commenced in July 2013 under the California Labor Code Private Attorneys General Act (PAGA) alleging violation of California Wage Order 7-2001 for failing to provide seating to employees who work at entrance and exit doors in California warehouses. ~~Canela v. Costco Wholesale Corp.~~ ~~(Case No. 2013-1-CV-248813; Santa Clara Superior Court).~~The complaint seeks relief under the California Labor Code, including civil penalties and attorneys’ fees. The Company filed an answer denying the material allegations of the complaint. On April 26, 2023, the court entered a final judgment in favor of the Company.

~~In December 2018, a depot employee raised similar claims, alleging that depot employees in California did not receive suitable seating or reasonably comfortable workplace temperature conditions.~~ ~~Lane v. Costco Wholesale Corp.~~ (Case No. CIVDS 1908816; San Bernardino Superior Court). In October 2019, the parties settled for an immaterial amount the seating claims on a representative basis, which received court approval in February 2020. The parties settled the temperature claims for an immaterial amount in April 2022, and court approval was received in May 2022.

~~In June 2022, a business center employee raised similar claims, alleging failure to provide seating to employees who work at membership refund desks in California warehouses and business centers.~~ ~~Rodriguez v. Costco Wholesale Corp.~~ (Case No. 22CV012847; Alameda Superior Court). The complaint seeks relief under the California Labor Code, including civil penalties and attorneys' fees. The Company filed an answer denying the material allegations of the complaint.

In March 2019, employees filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide meal and rest periods and itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices. Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. ~~Nevarez v. Costco Wholesale Corp.~~ (Case No. 2:19-cv-03454; C.D. Cal.). The Company filed an answer denying the material allegations of the complaint. In December 2019, the court issued an order denying class certification. In January 2020, the plaintiffs dismissed their Labor Code claims without prejudice, and the court remanded the action to state court. Settlement for an immaterial amount was agreed upon in February 2021. Final court approval of the settlement was granted on May 3, 2022. A proposed intervenor appealed the denial of her motion to intervene. Her appeal was dismissed on February 15, 2023.

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~~In May 2019, an~~former employee filed a class action against the Company alleging claims under California law for failure to pay minimum wage, failure to pay overtime, failure to provide ~~itemized~~meal and rest breaks, failure to provide accurate wage statements, failure to ~~timely~~reimburse expenses, failure to pay wages when due, ~~to terminating employees,~~and failure to pay ~~minimum wages, and for unfair business practices.~~sick pay. ~~Rough~~Martin Reyes v. Costco Wholesale ~~Corp~~Corporation., Sacramento County Superior Court. (Case No. ~~2:19-cv-01340; E.D. Cal.)~~23cv011351). Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. In September 2021, the court granted Costco’s motion for partial summary judgment and denied class certification. In August 2019, the plaintiff filed a companion case in state court seeking penalties under PAGA. ~~Rough v. Costco Wholesale Corp.~~ ~~(Case No. FCS053454; Sonoma County Superior Court). Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. The state court action~~An amended complaint has been ~~stayed pending resolution of~~filed, as to which the ~~federal action.~~Company has yet to respond.

In ~~December 2020, a~~October 2023, current and former ~~employee~~employees filed suit against the Company asserting collective and class claims on behalf of ~~non-exempt employees~~all “Junior Managers” under the Fair Labor Standards Act and New York Labor Law, for failure to pay overtime compensation and for ~~all hours worked, failure to pay certain non-exempt employees on a weekly basis, and failure to provide proper~~inaccurate wage statements ~~and notices. The plaintiff also asserted individual retaliation claims.~~ under New York law.

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~~Cappadora~~Lock et al. v. Costco Wholesale Corp. (Case No. ~~1:20-cv-06067;~~2:23-cv-07904; E.D.N.Y.). ~~An amended complaint was filed, and~~On February 1, 2024, the Company ~~denied~~served a motion to dismiss the ~~material allegations of the amended complaint. Based on an agreement in principle concerning settlement of the matter, involving~~inaccurate wage-statement claim.

In October 2023, a ~~proposed payment by the Company of an immaterial amount, the federal action has been dismissed. In April 2022, Cappadora and a second plaintiff~~current employee filed ~~an action~~suit against the Company ~~in New York state court,~~ asserting ~~the same class claims asserted in the federal action under the New York Labor Law~~collective and ~~seeking preliminary approval of the class settlement.~~ ~~Cappadora and Sancho v. Costco Wholesale Corp.~~ ~~(Index No. 604757/2022; Nassau County Supreme Court). Following final approval of the settlement, the case was dismissed on April 14, 2023.~~

~~In August 2021, a former employee filed a similar suit, asserting~~ class claims on behalf of ~~certain non-exempt employees under~~all “supervisors” employed in New ~~York Labor Law for failure to pay on a weekly basis.~~ ~~Umadat v. Costco Wholesale Corp.~~ (Case No. 2:21-cv-4814; E.D.N.Y.). The Company filed an answer, denying the material allegations of the complaint. In April 2022, a former employee filed a similar suit, asserting class claims on behalf of certain non-exempt employees under New York Labor Law, as well asJersey, under the Fair Labor Standards Act ~~for failure to pay on a weekly basis~~ and ~~failure to pay overtime.~~ ~~Burian v. Costco Wholesale Corp.~~ ~~(Case No. 2:22-cv-02108; E.D.N.Y.). In September 2022, an amended complaint was filed, asserting class claims on behalf of certain non-exempt employees under~~ New ~~York Labor~~Jersey Wage and Hour Law for failure to pay ~~on a weekly basis. In April 2023 the case was settled on an individual basis for an immaterial amount.~~

In February 2021, a former employee filed a class action against the Company alleging violations of California Labor Code regarding payment of wages, meal and rest periods, wage statements, reimbursement of expenses, payment of final wages to terminated employees, and for unfair business practices.all hours worked. ~~Edwards~~Shah v. Costco Wholesale Corp.~~(Case~~ (Case No. ~~5:21-cv-00716: C.D. Cal.~~2:23-cv-21286; D.N.J.). ~~In May 2021,~~On December 26, 2023, the Company filed a motion to dismiss the complaint, which was granted with leave to amend. In June 2021, the plaintiff filed an amended complaint, which the Company moved to dismiss. The court granted the motion in part in July 2021 with leave to amend. In August 2021, the plaintiff filed a second amended complaint and filed a separate representative action under PAGA asserting the same Labor Code claims and seeking civil penalties and attorneys' fees. The Company filed anits answer, ~~to the second amended class action complaint,~~ denying the material allegations. The Company also filed an answer to the PAGA representative action, denying the material allegations. On September 27, 2022, the parties reached a settlement for an immaterial amount. A hearing for final court approval is set for September 11, 2023.all claims.

In July 2021, a former temporary staffing employee filed a class action against the Company and a staffing company, alleging violations of the California Labor Code regarding payment of wages, meal and rest periods, wage statements, the timeliness of wages and final wages, and for unfair business practices. Dimas v. Costco Wholesale Corp. (Case No. STK-CV-UOE-2021-0006024; San Joaquin Superior Court). The Company has moved to compel arbitration of the plaintiff's individual claims and to dismiss the class action complaint. On September 7, 2021, the same plaintiff filed a separate representative action under

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~~PAGA,~~ the California Private Attorneys General Act, asserting the same Labor Code violations and seeking civil penalties and attorneys' fees. The case has been stayed pending arbitration of the ~~plaintiff’s~~plaintiff's individual claims.

In September 2021, an employee filed a class action against the Company alleging violations of the California Labor Code regarding failure to provide sick pay, failure to timely pay wages due at separation from employment, and for violations of California's unfair competition law. ~~De Benning v. Costco Wholesale Corp.~~ (Case No. 34-2021-00309030-CU-OE-GDS; Sacramento Superior Court). The Company answered the complaint in January 2022, denying its material allegations. In April 2022, a settlement for an immaterial amount was agreed upon, subject to court approval. Final approval of the settlement was granted on February 10, 2023.

In March 2022, an employee filed a class action against the Company alleging violations of the California Labor Code regarding the failure to: pay wages, provide meal and rest periods, provide accurate wage statements, timely pay final wages, and reimburse business expenses. ~~Diaz v. Costco Wholesale Corp.~~ ~~(Case No. 22STCV09513; Los Angeles Superior Court). The Company filed an answer denying the material allegations. In December 2022, the case was settled for an immaterial amount.~~

In May 2022, an employee filed ~~a PAGA-only representative~~an action under the California Private Attorneys General Act against the Company, alleging claims under the California Labor Code regarding the payment of wages, meal and rest periods, the timeliness of wages and final wages, wage statements, accurate records and business expenses. Gonzalez v. Costco Wholesale Corp. (Case No. 22AHCV00255; Los Angeles Superior Court). The Company filed an answer denying the allegations. On October 31, 2023, a settlement was reached for an immaterial amount. A hearing on preliminary approval of the settlement is scheduled for April 23, 2024.

Beginning in December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases concerning the impacts of opioid abuses filed against various defendants by counties, cities, hospitals, Native American tribes, third-party payors, and others. In re National Prescription Opiate Litigation (MDL No. 2804) (N.D. Ohio). Included are cases filed against the Company by counties and cities in Michigan, New Jersey, Oregon, Virginia and South Carolina, a third-party payor in Ohio, and a hospital in Texas, class actions filed on behalf of infants born with opioid-related medical conditions in 40 states, and class actions and individual actions filed on behalf of individuals seeking to recover alleged increased insurance costs associated with opioid abuse in 43 states and American Samoa. Claims against the Company filed in federal court outside the MDL have been asserted by certain counties and cities in Florida and Georgia; claims filed by certain cities and counties in New York are pending in state court. Claims against the Company in state courts in New Jersey, Oklahoma, Utah, and Arizona have been dismissed. The Company is defending all of the pending matters.

Members of the Board of Directors, six corporate officers and the Company ~~are~~were defendants in a shareholder derivative action filed in June 2022 related to chicken welfare and alleged breaches of fiduciary duties. Smith, et ano. v. Vachris,, et al., Superior Court of the State of Washington, County of King, No, 22-2-08937-7SEA. The complaint ~~seeks~~sought from the individual ~~defendants~~defendants' damages, injunctive relief, costs, and attorneys' fees. On March 28, 2023, the court granted the ~~defendants’~~defendants' motion to dismiss the action. The plaintiffs subsequently made a demand that the Board of Directors take various actions, including among other things, pursuing claims against directors and officers of the type asserted in the litigation. A demand review committee of the Board has been appointed to make a recommendation to the Board as to the demand.

In February 2023, Go Green Norcal, LLC filed an arbitration demand against the Company. The demand alleged a breach of a supply agreement and sought unspecified damages and cancellation of a loan from the Company. In March 2023, the Company filed its answer, denying any breach by the Company, along with counterclaims against Go Green and an affiliate for breach of contract, negligent misrepresentation, and an accounting. In August 2023 the plaintiff asserted that its damages exceed $70 million. An award to the plaintiffs of an immaterial amount was paid in February 2024.

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Between September 25, 2023, and October 31, 2023, five class action suits were filed against the Company alleging various privacy law violations stemming from pixel trackers on Costco.com. Birdwell v. Costco Wholesale Corp., Case No. T23-1405, Contra Costa County Superior Court; and Scott v. Costco Wholesale Corp., Case No. 2:23-cv-08808 (C.D. Cal.), now consolidated with R.S. v. Costco Wholesale Corp., Case No. 2:23-cv-01628 (W.D. Wash.); Groves, et ano. v. Costco Wholesale Corp., Case No. 2:23-cv-01662 (W.D. Wash.) and Castillo v. Costco Wholesale Corp., under Case No. 2:34-cv-01548 (W.D. Wash.). The Castillo plaintiffs filed a consolidated complaint on January 26, 2024, which seeks damages, equitable relief and attorneys’ fees under various statutes, including the Washington Consumer Protection Act, Washington Privacy Act, Washington Uniform Health Care Information Act,Electronic Communications Privacy Act, California Invasion of Privacy Act, and California Confidentiality of Medical Information Act. The consolidated complaint also alleges breach of implied contract, invasion of privacy, conversion and unjust enrichment. The Company filed a motion to dismiss and demurrer in Birdwell and has not responded to the Castillo consolidated complaint. On January 2, 2024, the Company received a related civil investigative demand from the Washington Attorney General's office. On January 3, 2024, the Company received a related pre-litigation letter from the Los Angeles Office of the County Counsel.

In October 2021 the Company received a notice that the Quebec Health Insurance Board had commenced an inquiry to determine whether the Company had given or received improper payments for drugs that are covered by the province's prescription drug program from drug wholesalers, generic drug manufacturers or the independent pharmacist who owns and operates the pharmacies located in the Company's Quebec locations. The inquiry covers a period beginning January 1, 2017.

In January 2023 the Company received a Civil Investigative Demand from the U.S. Attorney's Office, Western District of Washington, requesting documents. The government is conducting a False Claims Act investigation concerning whether the Company presented or caused to be presented to the federal government for payment false claims relating to prescription medications.

The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows; it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.

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Note 9—Segment Reporting

The Company is principally engaged in the operation of membership warehouses through wholly owned subsidiaries in the U.S., Canada, Mexico, Japan, the U.K., Korea, Australia, Taiwan, ~~Australia,~~China, Spain, France, ~~China,~~ Iceland, New Zealand, and Sweden. Reportable segments are largely based on management’s organization of the operating segments for operational decisions and assessments of financial performance, which ~~considers~~consider geographic locations. The material accounting policies of the segments are as described in the notes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K for the fiscal year ended ~~August 28, 2022,~~September 3, 2023, and Note 1 above. Inter-segment net sales and expenses have been eliminated in ~~computing~~calculating total revenue and operating income.

The following table provides information for the Company's reportable segments:


		United States Operations		Canadian Operations		Other International Operations		Total
12 Weeks Ended May 7, 2023
	United States									United States	Canada	Other International	Total
12 Weeks Ended February 18, 2024
Total revenue
Total revenue
Total revenue	Total revenue	$	39,049	$	7,268	$	7,331	$	53,648
Operating income	Operating income	1,027		327		325		1,679
12 Weeks Ended May 8, 2022
12 Weeks Ended February 12, 2023
Total revenue
Total revenue
Total revenue	Total revenue	$	38,534	$	7,268	$	6,794	$	52,596
Operating income	Operating income	1,205		324		262		1,791
36 Weeks Ended May 7, 2023
24 Weeks Ended February 18, 2024
Total revenue
Total revenue
Total revenue	Total revenue	$	119,339	$	21,923	$	22,089	$	163,351
Operating income	Operating income	3,558		899		876		5,333

36 Weeks Ended May 8, 2022
24 Weeks Ended February 12, 2023
24 Weeks Ended February 12, 2023
24 Weeks Ended February 12, 2023
Total revenue
Total revenue
Total revenue	Total revenue	$	112,418	$	21,406	$	21,039	$	154,863
Operating income	Operating income	3,502		918		876		5,296

52 Weeks Ended August 28, 2022
53 Weeks Ended September 3, 2023
53 Weeks Ended September 3, 2023
53 Weeks Ended September 3, 2023
Total revenue
Total revenue
Total revenue	Total revenue	$	165,294	$	31,675	$	29,985	$	226,954
Operating income	Operating income	5,268		1,346		1,179		7,793

Disaggregated Revenue

The following table summarizes net sales by merchandise category; sales from e-commerce websites and business centers have been allocated to the applicable merchandise categories:


		12 Weeks Ended				36 Weeks Ended
		May 7, 2023		May 8, 2022		May 7, 2023		May 8, 2022
	12 Weeks Ended										12 Weeks Ended			24 Weeks Ended
	February 18, 2024									February 18, 2024		February 12, 2023	February 18, 2024		February 12, 2023
Foods and Sundries	Foods and Sundries	$	21,298	$	19,594	$	64,672	$	58,646
Non-Foods	Non-Foods	13,087		13,810		41,860		43,077
Fresh Foods	Fresh Foods	7,194		6,813		21,287		20,211
Warehouse Ancillary and Other Businesses	Warehouse Ancillary and Other Businesses	11,025		11,395		32,461		30,032
Total net sales	Total net sales	$	52,604	$	51,612	$	160,280	$	151,966

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Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

(amounts in millions, except per share, share, percentages and warehouse count data)

FORWARD-LOOKING STATEMENTS

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 and may relate to such matters as net sales growth, changes in comparable sales, cannibalization of existing locations by new openings, price or fee changes, earnings performance, earnings per share, stock-based compensation expense, warehouse openings and closures, capital spending, the effect of adopting certain accounting standards, future financial reporting, financing, margins, return on invested capital, strategic direction, expense controls, membership renewal rates, shopping frequency, litigation, and the demand for our products and services. In some cases, forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. 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, inflation or deflation, 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 (generally including health-care costs), energy and certain commodities, geopolitical conditions (including tariffs and the Ukraine conflict), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, public-health related factors, 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 the Company does not undertake to update these statements, except as required by law.

OVERVIEW

~~The following~~ Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q), as well as our consolidated financial statements, the accompanying Notes to Financial Statements, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year ~~2022~~2023 Form 10-K, filed with the United States Securities and Exchange Commission on October ~~5, 2022.~~11, 2023.

We operate membership warehouses and e-commerce websites based on the concept that offering ~~our~~ members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover. When combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, these volumes and turnover enable us to operate profitably at significantly lower gross margins (net sales less merchandise costs) than most other retailers. We often sell inventory before we are required to pay for it, even while taking advantage of early payment discounts.

We believe that the most important driver of our profitability is increasing net sales, particularly comparable sales. Net sales includes our core merchandise categories (foods and sundries, non-foods, and fresh foods), warehouse ancillary (gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and other businesses (e-commerce, business centers, travel, and other). ~~We define~~Comparable sales is

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~~comparable sales~~defined as net sales from warehouses open for more than one year, including remodels, relocations and expansions, and sales related to e-commerce websites operating for more than one year. The measure is intended as supplemental information and is not a substitute for net sales presented in accordance with U.S. GAAP. Comparable sales growth is achieved through increasing shopping frequency from new and existing members and the amount they spend on each visit (average ticket). Sales comparisons can also be particularly influenced by certain factors that are beyond our control: fluctuations in currency exchange rates (with respect to our international operations); and inflation or deflation and changes in the cost of gasoline and associated competitive conditions. The higher our comparable sales exclusive of these items, the more we can leverage our ~~SG&A~~selling general and administrative (SG&A) expenses, reducing them as a percentage of sales and enhancing profitability. Generating comparable sales growth is foremost a question of making available ~~to our members~~ the right merchandise at the right prices, a skill that we believe we have repeatedly demonstrated over the long-term. Another substantial factor in net sales growth is the health of the economies in which we do business, including the effects of inflation or deflation, especially the United States. Net sales growth and gross margins are also impacted by our competition, which is vigorous and widespread, across a wide range of global, national and regional wholesalers and retailers, including those with e-commerce operations. While we cannot control or reliably predict general economic health or changes in competition, we believe that we have been successful historically in adapting our business to these changes, such as through adjustments to our pricing and merchandise mix, including increasing the penetration of our private-label items, and through online offerings.

Our philosophy is to provide our members with quality goods and services at competitive prices. We do not focus in the short-term on maximizing prices charged, but instead seek to maintain what we believe is a perception among our members of our “pricing authority” – consistently providing the most competitive values. Merchandise costs in the third quarter of 2023 continued to be impacted by inflation. The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to cost increases. Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, as well as passing cost increases on to our members. Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, all negatively impacting gross margin and gross margin as a percentage of net sales (gross margin percentage).

We believe our gasoline business enhances traffic in our ~~warehouses, but~~warehouses; it generally has a lower gross margin percentage ~~relative to our non-gasoline businesses. It also has~~and lower SG&A ~~expenses as a percent of net sales compared~~expense relative to our non-gasoline businesses. A higher penetration of gasoline sales will generally lower our gross margin percentage. ~~Rapidly changing gasoline prices may significantly impact our near-term net sales growth.~~ Generally, rising gasoline prices benefit net sales growth which, given the higher sales base, negatively impacts our gross margin percentage but decreases our SG&A expenses as a percentage of net sales. A decline in gasoline prices has the inverse effect. ~~Additionally, government~~

Government actions in various countries relating to tariffs, particularly China and the United States, have affected the costs of some of our merchandise. The degree of our exposure is dependent on (among other things) the type of goods, rates imposed, and timing of the tariffs. Higher tariffs could adversely impact our results.

We also achieve net sales growth by opening new warehouses. As our warehouse base grows, available and desirable sites become more difficult to secure, and square footage growth becomes a comparatively less substantial component of growth. ~~The negative~~Negative aspects of such growth ~~however, including~~include lower initial operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing ~~markets, are continuing to decline in significance as they relate to the results of our total operations.~~markets. Our rate of square footage growth is generally higher in foreign markets, due to the smaller base in those markets, and we expect that to continue. Our e-commerce business, domestically and internationally, generally has a lower ~~gross margin~~gross-margin percentage than our warehouse operations.

The membership format is an integral part of our business and has a significant effect on our profitability. This format is designed to reinforce member loyalty and provide continuing fee revenue. The extent to which we achieve growth in our membership base, increase the penetration of ~~our~~ Executive ~~members,~~

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memberships, and sustain high renewal rates materially influences our profitability. Our paid-membership growth rate may be adversely impacted when warehouse openings occur in existing markets as compared to new markets.

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Our financial performance depends heavily on controlling costs. While we believe that we have achieved successes in this area, some significant costs are partially outside our control, particularly health care and utility expenses. With respect to the compensation of our employees, our philosophy is not to seek to minimize their wages and benefits. Rather, we believe that achieving our longer-term objectives of reducing employee turnover and enhancing employee satisfaction ~~require~~requires maintaining compensation levels that are better than the industry average for much of our workforce. This may cause us, for example, to absorb costs that other employers might seek to pass through to their workforces. Because our business operates on very low margins, modest changes in various items in the consolidated statements of income, particularly merchandise costs and SG&A expenses, can have substantial impacts on net income.

Our operating model is generally the same across our U.S., Canadian, and Other International operating segments (see Note 9 to the ~~condensed~~ consolidated financial statements included in Part I, Item 1, of this Report). Certain operations in the Other International segment have relatively higher rates of square footage growth, lower wage and benefit costs as a percentage of sales, less or no direct membership warehouse competition, or lack e-commerce or business delivery.

In discussions of our consolidated operating results, we refer to the impact of changes in foreign currencies relative to the U.S. dollar, which are differences between the foreign-exchange rates we use to convert the financial results of our international operations from local currencies into U.S. dollars. This impact of foreign-exchange rate changes is calculated based on the difference between the current and prior period's ~~currency~~ exchange rates. The impact of changes in gasoline prices on net sales is calculated based on the difference between the current and prior period's average price per gallon sold. Results expressed excluding the impacts of foreign exchange and gasoline prices are intended as supplemental information and are not a substitute for net sales presented in accordance with U.S. GAAP and should be reviewed in conjunction with results reported in accordance with U.S. GAAP.

Our fiscal year ends on the Sunday closest to August 31. References to the ~~third~~second quarter of ~~2023~~2024 and ~~2022~~2023 relate to the 12-week fiscal quarters ended ~~May 7, 2023,~~February 18, 2024, and ~~May 8, 2022.~~February 12, 2023. References to the first ~~thirty-six weeks~~half of ~~2023~~2024 and ~~2022~~2023 relate to the 3624 weeks ended ~~May 7, 2023,~~February 18, 2024, and ~~May 8, 2022.~~February 12, 2023. Certain percentages presented are calculated using actual results prior to rounding. ~~Unless otherwise noted, references to net income relate to net income attributable to Costco.~~

Highlights for the ~~third~~second quarter of ~~2023~~2024 versus ~~2022~~2023 include:

•Net sales increased 2%6% to ~~$52,604,~~$57,331, driven by an increase in comparable sales and sales at 2326 net new warehouses opened since the end of the ~~third~~second quarter of ~~2022;~~2023;

•Membership fee revenue increased 6%8% to ~~$1,044,~~$1,111, driven by new member sign-ups, upgrades to Executive Membership, and a higher renewal rate;

•Gross margin percentage increased 13eight basis points, driven primarily by our warehouse ancillary and other businesses and core merchandise categories, ~~and the absence of a LIFO charge as was recorded in the third quarter of 2022. This was~~ partially offset by ~~a charge of $298, $0.50 per diluted share, predominantly related to the discontinuation of our charter shipping activities;~~an increase in 2% rewards;

•SG&A expenses as a percentage of net sales increased 49three basis points, primarily due to increased costs in warehouse operations and other businesses, ~~primarily wages and benefits, driven by various~~including the impact of wage increases ~~effective~~ in March and ~~July 2022, and March~~September 2023, ~~as well as slower sales growth;~~

•~~In the third quarter of 2022 we incurred a one-time $77 pretax charge, $0.13 per diluted share, related to granting our employees additional vacation;~~

•~~Net income was $1,302, $2.93 per diluted share, compared to $1,353, $3.04 per diluted share in 2022; and~~partially offset by central operating costs;

•A quarterly cash dividend of $1.02 per share was declared on ~~April 19, 2023~~January 18, 2024, and paid on ~~May 19,~~February 16, 2024. On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special cash dividend of $15.00 per share, declared on December 13, 2023;

•Our effective tax rate was 22.1% and was positively impacted by a $94 benefit, or $0.21 per diluted share, related to the special cash dividend; and

•Net income was $1,743, $3.92 per diluted share, compared to $1,466, $3.30 per diluted share in 2023.

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RESULTS OF OPERATIONS

Net Sales


		12 Weeks Ended						36 Weeks Ended
		May 7, 2023			May 8, 2022			May 7, 2023			May 8, 2022
	12 Weeks Ended																			12 Weeks Ended							24 Weeks Ended
	February 18, 2024																February 18, 2024				February 12, 2023				February 18, 2024					February 12, 2023
Net Sales	Net Sales	$	52,604		$	51,612		$	160,280		$	151,966
Changes in net sales:	Changes in net sales:
U.S.
U.S.
U.S.	U.S.	1		%	18		%	6		%	17		%	4	%			7	%			4	%			9		%
Canada	Canada	—		%	16		%	2		%	17		%	Canada	8	%			4	%			8	%				4	%
Other International	Other International	8		%	9		%	5		%	12		%	Other International	10	%			7	%			13	%				4	%
Total Company	Total Company	2		%	16		%	5		%	16		%	Total Company	6	%			6	%			6	%				7	%
Changes in comparable sales:
Changes in comparable sales(1):
U.S.
U.S.
U.S.	U.S.	—		%	17		%	5		%	16		%	4	%			6	%			3	%			8		%
Canada	Canada	(1)		%	15		%	2		%	16		%	Canada	9	%			4	%			8	%				3	%
Other International	Other International	4		%	6		%	2		%	8		%	Other International	9	%			4	%			10	%				—	%
Total Company	Total Company	—		%	15		%	4		%	15		%	Total Company	6	%			5	%			5	%				6	%
E-commerce	E-commerce	(10)		%	7		%	(8)		%	11		%	E-commerce	18	%			(10)	%			12	%				(7)	%
Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices:
Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices(1):
U.S.
U.S.
U.S.	U.S.	2		%	11		%	5		%	11		%	5	%			6	%			4	%			6		%
Canada	Canada	7		%	13		%	8		%	11		%	Canada	9	%			10	%			9	%				9	%
Other International	Other International	8		%	9		%	9		%	10		%	Other International	8	%			10	%			8	%				9	%
Total Company	Total Company	3		%	11		%	6		%	11		%	Total Company	6	%			7	%			5	%				7	%
E-commerce	E-commerce	(9)		%	8		%	(7)		%	11		%	E-commerce	18	%			(9)	%			12	%				(6)	%

_______________

(1)Comparable sales for the second quarter and first half of 2024 were calculated using comparable retail weeks.

Net Sales

Net sales increased ~~$992~~$3,092 or 2%6%, and ~~$8,314~~$6,372 or 5%6% during the ~~third~~second quarter and first ~~thirty-six weeks~~half of ~~2023.~~2024. The improvement ~~in the third quarter of 2023~~ was attributable to an increase in comparable sales of 6% and 5% in the second quarter and first half of 2024, and sales at the 2326 net new warehouses opened since the end of the ~~third~~second quarter of ~~2022. The increase in net sales for the first thirty-six weeks of 2023 was driven primarily by a 4% increase in comparable sales.~~ 2023. Sales increased ~~$1,362,~~$2,645, or 3%6% and ~~$5,885,~~$5,566, or 5%6% in core merchandise categories during the ~~third~~second quarter and first ~~thirty-six weeks~~half of ~~2023, led by foods and sundries and fresh foods; while non-foods decreased.~~2024, due to increases in all categories. Sales in warehouse ancillary and other businesses ~~decreased $370,~~increased $447 or 3%4%, and $806, or 4% during the ~~third~~second quarter and first half of 2023, due to lower gasoline prices, partially offset by increases in pharmacy, travel, food court and optical. Sales increased $2,429, or 8% in warehouse ancillary and other businesses during the first thirty-six weeks of 2023,2024, led by ~~gasoline, pharmacy and travel.~~pharmacy.

During the ~~third~~second quarter of ~~2023,~~2024, lower gasoline prices negatively impacted net sales by ~~$862, 167~~$231, 43 basis points, compared to ~~2022,~~2023, with a ~~12%~~3% decrease in the average price per gallon. T~~he volume of gasoline sold increased approximately 1%, positively impacting net sales by $86, 17 basis points.~~ Changes in foreign currencies relative to the U.S. dollar ~~negatively~~positively impacted net sales by approximately ~~$782, 152~~$94, 17 basis points, compared to the ~~third~~second quarter of ~~2022,~~2023, attributable to our Canadian and Other International operations.

During the first half of 2024, lower gasoline prices negatively impacted net sales by $572, 53 basis points, compared to 2023, with a 4% decrease in the average price per gallon. Changes in foreign currencies relative to the U.S. dollar positively impacted net sales by approximately $289, 27 basis points, compared to the second quarter of 2023, attributable to our Other International operations, partially offset by our Canadian operations.

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During the first thirty-six weeks of 2023, higher gasoline prices positively impacted net sales by $392, 26 basis points, compared to 2022, with a slight increase in the average price per gallon. The volume of gasoline sold increased approximately 7%, positively impacting net sales by $1,301, 86 basis points. Changes in foreign currencies relative to the U.S. dollar negatively impacted net sales by approximately $3,253, 214 basis points, compared to the first thirty-six weeks of 2022, attributable to our Canadian and Other International operations.

Comparable Sales

Comparable sales increased 6% and 5% in the second quarter and first half of 2024 and were positively impacted by ~~an increase in~~increased shopping ~~frequency, largely offset by~~frequency and a ~~decrease in~~slightly higher average ~~ticket in the third quarter of 2023. Comparable sales increased 4% in the first thirty-six weeks of 2023, driven by an increase in shopping frequency.~~ticket.

Membership Fees


		12 Weeks Ended						36 Weeks Ended
		May 7, 2023			May 8, 2022			May 7, 2023			May 8, 2022
	12 Weeks Ended																		12 Weeks Ended					24 Weeks Ended
	February 18, 2024																February 18, 2024			February 12, 2023			February 18, 2024				February 12, 2023
Membership fees	Membership fees	$	1,044		$	984		$	3,071		$	2,897
Membership fees increase	Membership fees increase	6		%	9		%	6		%	10		%	Membership fees increase	8	%		6	%		8	%			6	%
Total paid members (000s)	Total paid members (000s)	69,100			64,400			—			—
Total cardholders (000s)	Total cardholders (000s)	124,700			116,600			—			—

Membership fee revenue increased 6%8% in both the ~~third~~second quarter and first ~~thirty-six weeks~~half of ~~2023,~~2024, driven by new member sign-ups, upgrades to Executive Membership, and a higher renewal rate. ~~Changes in foreign currencies relative to the U.S. dollar negatively impacted membership fees by $17 and $70 in the third quarter and first thirty-six weeks of 2023.~~ At the end of the ~~third~~second quarter of ~~2023,~~2024, our renewal rates were ~~92.6%~~92.9% in the U.S. and Canada and 90.5% worldwide. Renewal rates ~~continue to benefit~~benefited from ~~more members auto renewing and increased~~higher penetration of Executive ~~members, who on average renew at a higher rate.~~members. Our renewal rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.

We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period. ~~Our membership counts include active memberships and memberships that have not renewed within the 12 months prior to the reporting date.~~

Gross Margin


		12 Weeks Ended						36 Weeks Ended
		May 7, 2023			May 8, 2022			May 7, 2023			May 8, 2022
	12 Weeks Ended																		12 Weeks Ended					24 Weeks Ended
	February 18, 2024																February 18, 2024			February 12, 2023			February 18, 2024				February 12, 2023
Net sales	Net sales	$	52,604		$	51,612		$	160,280		$	151,966
Less merchandise costs	Less merchandise costs	47,175			46,355			143,367			135,824
Gross margin	Gross margin	$	5,429		$	5,257		$	16,913		$	16,142
Gross margin percentage	Gross margin percentage	10.32		%	10.19		%	10.55		%	10.62		%	Gross margin percentage	10.80	%		10.72	%		10.92	%			10.67	%

Quarterly Results

~~Total gross~~Gross margin percentage increased 13eight basis ~~points compared to the third quarter of 2022.~~points. Excluding the impact of gasoline price deflation on net sales, gross margin percentage was ~~10.16%~~10.76%, ~~a decrease~~an increase of ~~three~~four basis points. ~~This was driven by a net 52~~The four basis-point decrease due to a charge, primarily for the discontinuation of our charter shipping activities and the benefit from the absence of a charge related to granting employees additional vacation as was recorded in the third quarter of 2022. Increased 2% rewards negatively impacted gross margin by nine basis points. Gross marginincrease was positively impacted ~~by 25~~by: six basis points due to ~~the absence of a LIFO charge as was recorded in the third quarter of 2022. Core merchandise categories positively impacted gross margin by 24~~warehouse ancillary and other businesses, primarily e-commerce; three basis points due to ~~foods~~a LIFO benefit; and ~~sundries,~~

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two basis points due to core merchandise categories. This increase was partially offset by ~~non-foods. Warehouse ancillary and other businesses positively impacted gross margin by nine~~seven basis ~~points. Changes in foreign currencies relative~~points due to ~~the U.S. dollar negatively impacted gross margin by approximately $81, compared to the third quarter of 2022,~~ ~~attributable to our Canadian and Other International operations.~~increased 2% rewards.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 1725 basis points. The increase was primarily due to non-foods and foods and sundries, ~~and non-foods,~~ partially offset by fresh foods. This measure eliminates the impact of changes in sales penetration and gross ~~margins~~margin from our warehouse ancillary and other businesses.

Gross margin percentage on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), ~~performed similarly to the consolidated results above~~decreased in our U.S. ~~segment.~~segment due to core merchandise categories and increased 2% rewards, partially offset by warehouse ancillary and other businesses and a LIFO benefit. Gross margin ~~percentage~~ increased in our Canadian ~~and~~segment, largely due to core merchandise categories. Gross margin decreased in our Other International segment, primarily due to ~~increases in core merchandise categories~~increased 2% rewards and warehouse ancillary and other ~~businesses. All segments were negatively impacted~~businesses, partially offset by ~~increased 2% rewards.~~increases in core merchandise categories.

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Year-to-date Results

~~Total gross~~Gross margin percentage ~~decreased seven~~increased 25 basis ~~points compared to the first thirty-six weeks of 2022.~~points. Excluding the impact of gasoline price ~~inflation~~deflation on net sales, gross margin percentage was ~~10.58%~~10.86%, ~~a decrease~~an increase of ~~four~~19 basis points. ~~This~~The 19 basis-point increase was ~~driven by charges in~~positively impacted by: 15 basis points due to warehouse ancillary and other business, primarily e-commerce; nine basis points due to the ~~first and third quarters~~absence of ~~2023~~a charge related to the ~~downsizing and then~~ discontinuation of our charter shipping activities ~~totaling 24 basis points. Gross margin~~that was ~~also negatively impacted by five~~recorded in the first quarter of 2023; and two basis points due to a LIFO benefit. This increase was partially offset by five basis points due to increased 2% rewards and ~~three~~two basis points due to ~~decreases in~~ core merchandise categories predominantly in non-foods and fresh foods, partially offset by foods and sundries. Warehouse ancillary and other businesses, positively impacted gross margin by 14 basis points, predominantly gasoline, partially offset by e-commerce. A smaller LIFO charge in the first thirty-six weeks of 2023 compared to the first thirty-six weeks of 2022 also positively impacted gross margin by 14 basis points. Changes in foreign currencies relative to the U.S. dollar negatively impacted gross margin by approximately $325, compared to the first thirty-six weeks of 2022, ~~attributable to our Canadian and Other International operations.~~.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), ~~decreased~~increased 14 basis points. The ~~decrease~~increase was primarily due to ~~fresh foods and~~ non-foods, partially offset by ~~foods~~fresh foods.

Segment gross margin percentage increased in our U.S. and ~~sundries.~~

Canadian segments. Our U.S. segment performed similarly to the consolidated results above. Our Canadian segment gross margin increased at a greater rate compared to our consolidated results, primarily due to increases in core merchandise categories, partially offset by increased 2% rewards. Gross margin percentage was flat in our U.S. segment due to the charge related to the discontinuation of our charter shipping activities discussed above, offset by a smaller LIFO charge and increases in warehouse ancillary and other businesses, primarily gasoline. Gross margin percentage decreased in our Canadian and Other International segment, ~~due to decreases in~~positively impacted by core merchandise categories, ~~partially~~ offset ~~by warehouse ancillary and other businesses. All segments were negatively impacted~~ by increased 2% rewards.

Selling, General and Administrative Expenses
12 Weeks Ended 36 Weeks Ended
May 7,
2023 May 8,
2022 May 7,
2023 May 8,
2022
SG&A expenses $ 4,794 $ 4,450 $ 14,651 $ 13,743
SG&A expenses as a percentage of net sales 9.11 % 8.62 % 9.14 % 9.04 %

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	12 Weeks Ended						24 Weeks Ended
	February 18, 2024			February 12, 2023			February 18, 2024			February 12, 2023
SG&A expenses	$	5,240		$	4,940		$	10,598		$	9,857
SG&A expenses as a percentage of net sales	9.14		%	9.11		%	9.29		%	9.15		%

Quarterly Results

SG&A expenses as a percentage of net sales increased 49three basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was ~~8.96%~~9.10%, ~~an increase~~a decrease of 34one basis ~~points.~~point. The comparison to last year was ~~negatively~~favorably impacted by 35five basis points ~~in warehouse~~due to central operating costs and four basis points due to lower stock compensation expense. Warehouse operations and other businesses ~~largely attributable to~~were higher by eight basis points, driven by our U.S. operations, which included the ~~increased wages and benefits that were effective~~impact of wage increases in March and July 2022, and March 2023 and slower sales growth. Central operating costs were also higher by nine basis points, and preopening costs were higher by one basis point. SG&A was positively impacted by 11 basis points due to the absence of a charge related to granting our employees additional vacation as was recorded in the prior year. Changes in foreign currencies relative to the U.S. dollar decreasedSeptember 2023. SG&A expenses ~~by approximately $65 compared to the third quarter~~as a percentage of ~~2022.~~net sales were lower in our Canadian and Other International operations.

Year-to-date Results

SG&A expenses as a percentage of net sales increased 1014 basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price ~~inflation~~deflation was ~~9.16%~~9.25%, an increase of 1210 basis points. The comparison to last year was negatively impacted by 1611 basis points in warehouse operations and other businesses, ~~largely attributable to~~driven by our U.S. operations, which included the ~~increased wages and benefits that were effective~~impact of wage increases in March and ~~July 2022, and March 2023 and slower sales growth. Central operating~~September 2023. Preopening costs were also higher by ~~seven~~one basis ~~points.~~point. SG&A was positively impacted by 11two basis points due to the absence of a write-off of certain information technology assets and a charge related to granting our employees additional vacation as were recorded in the prior year. Changes in foreign currencies relative to the U.S. dollar decreasedcentral operating costs. SG&A expenses ~~by approximately $261 compared to the first thirty-six weeks~~as a percentage of ~~2022.~~net sales were lower in our Canadian and Other International operations.

Interest Expense
12 Weeks Ended 36 Weeks Ended
May 7,
2023 May 8,
2022 May 7,
2023 May 8,
2022
Interest expense $ 36 $ 35 $ 104 $ 110


	12 Weeks Ended				24 Weeks Ended
	February 18, 2024		February 12, 2023		February 18, 2024		February 12, 2023
Interest expense	$	41	$	34	$	79	$	68

Interest expense is primarily related to Senior Notes and financing leases. ~~The decrease in interest expense for the first thirty-six weeks~~

Table of ~~2023 was due to repayment of the 2.300% Senior Notes on December 1, 2021.~~Contents

Interest Income and Other, Net


		12 Weeks Ended				36 Weeks Ended
		May 7, 2023		May 8, 2022		May 7, 2023		May 8, 2022
	12 Weeks Ended										12 Weeks Ended			24 Weeks Ended
	February 18, 2024									February 18, 2024		February 12, 2023	February 18, 2024		February 12, 2023
Interest income	Interest income	$	110	$	6	$	269	$	21
Foreign-currency transaction gains (losses), net	Foreign-currency transaction gains (losses), net	9		56		3		94
Other, net	Other, net	9		9		23		23
Interest income and other, net	Interest income and other, net	$	128	$	71	$	295	$	138

The increase in interest income in the ~~third~~second quarter and first ~~thirty-six weeks~~half of ~~2023~~2024 was due to higher global interest ~~rates.~~rates and higher average cash and investment balances, prior to the payment of the special cash dividend. Foreign-currency transaction gains (losses), net, include ~~mark-to-market adjustments for forward foreign-exchange contracts and the~~ revaluation or settlement of monetary assets and liabilities by our Canadian and Other International ~~operations.~~operations and mark-to-market adjustments for forward foreign-exchange contracts. See Derivatives and Foreign Currency sections in Item 8, Note 1 of our Annual Report on Form 10-K, for the fiscal year ended ~~August 28, 2022.~~

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September 3, 2023.

Provision for Income Taxes


		12 Weeks Ended						36 Weeks Ended							12 Weeks Ended				24 Weeks Ended
		May 7, 2023			May 8, 2022			May 7, 2023			May 8, 2022				February 18, 2024		February 12, 2023			February 18, 2024		February 12, 2023
Provision for income taxes	Provision for income taxes	$	469		$	455		$	1,392		$	1,287
Effective tax rate	Effective tax rate	26.5		%	24.9		%	25.2		%	24.2		%	Effective tax rate	22.1	%	26.1	%		23.3	%	24.6	%

The effective tax rate for the first ~~thirty-six weeks~~half of 2024 was favorably impacted by net discrete tax benefits of $139. This included $94 related to the portion of the special cash dividend payable through our 401(k) plan in the second quarter and $44 of excess tax benefits related to stock compensation in the first quarter. Excluding discrete net tax benefits, the tax rate was 26.5%.

The effective tax rate for the first half of 2023 was impacted by net discrete tax benefits of $57, primarily due to excess tax benefits related to stock ~~compensation.~~compensation in the first quarter. Excluding discrete net tax benefits, the tax rate was ~~26.2%~~26.1%.

The effective tax rate for the first thirty-six weeks of 2022 was impacted by net discrete tax benefits of $114, primarily due to excess tax benefits related to stock compensation. Excluding discrete net tax benefits, the tax rate was 26.3%.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes our significant sources and uses of cash and cash equivalents:

36 Weeks Ended

May 7,
2023

May 8,
2022

24 Weeks Ended

February 18,
2024

February 12,
2023

Net cash provided by operating activities

7,343

4,886

Net cash used in investing activities

(3,147)

(2,428)

Net cash used in financing activities

(1,950)

(2,343)

Our primary sources of liquidity are cash flows from operations, cash and cash equivalents, and short-term investments. Cash and cash equivalents and short-term investments were ~~$13,708~~$10,321 and ~~$11,049~~$15,234 at ~~May 7, 2023,~~February 18, 2024, and ~~August 28, 2022.~~September 3, 2023. Of these balances, unsettled credit and debit card receivables represented approximately ~~$2,236~~$2,069 and ~~$2,010~~$2,282 at ~~May 7, 2023,~~February 18, 2024, and ~~August 28, 2022.~~September 3, 2023. These receivables generally settle within four days.

Material contractual obligations arising in the normal course of business primarily consist of purchase obligations, long-term debt and related interest payments, leases, and construction and land purchase obligations.

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Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months. Construction and land purchase obligations consist of contracts primarily related to the development and opening of new and relocated warehouses, the majority of which (other than leases) are due in the next 12 months.

Management believes that our cash and investment position and operating cash flows with capacity under existing and available credit agreements will be sufficient to meet our liquidity and capital requirements for the foreseeable future. We believe that our U.S. current and projected asset position is sufficient to meet our U.S. liquidity requirements.

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Cash Flows from Operating Activities

Net cash provided by operating activities totaled ~~$7,343~~$5,382 in the first ~~thirty-six weeks~~half of ~~2023,~~2024, compared to ~~$4,886~~$5,802 in the first ~~thirty-six weeks~~half of ~~2022.~~2023. Our cash flow provided by operations is primarily ~~from~~from net sales and membership fees. Cash flow used in operations generally consists of payments to ~~merchandise~~merchandise suppliers, warehouse operating costs, including payroll and employee benefits, utilities, and credit and debit card processing fees. Cash used in operations also includes payments for income taxes. Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is impacted by several factors, including inventory levels and turnover, the forward deployment of inventory to accelerate delivery times, payment terms with suppliers, and early payments to obtain discounts.

Cash Flows from Investing Activities

Net cash used in investing activities totaled ~~$3,147~~$1,752 in the first ~~thirty-six weeks~~half of ~~2023,~~2024, compared to ~~$2,428~~$1,865 in the first ~~thirty-six weeks~~half of ~~2022,~~2023, and is primarily related to capital expenditures. Net cash from investing activities also includes purchases and maturities of short-term investments.

Capital Expenditure Plans

Our primary requirements for capital are acquiring land, buildings, and equipment for new and remodeled warehouses. Capital is also required for information systems, manufacturing and distribution facilities, initial warehouse operations, and working capital. In the first ~~thirty-six weeks~~half of ~~2023,~~2024, we spent ~~$2,767~~$2,071 on capital expenditures, and it is our current intention to spend a total of approximately ~~$3,800~~$4,400 to ~~$4,200~~$4,600 during fiscal ~~2023.~~2024. These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents, and short-term investments. We opened 17 14 new warehouses, ~~including three relocations,~~including one relocation, in the first ~~thirty-six weeks~~half of ~~2023~~2024 and plan to open ~~nine~~16 additional new warehouses, including one relocation, in the remainder of fiscal ~~2023.~~2024. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs and the economic environment.

Cash Flows from Financing Activities

Net cash used in financing activities totaled ~~$1,950~~$8,250 in the first ~~thirty-six weeks~~half of ~~2023,~~2024, compared to ~~$2,343~~$1,215 in the first ~~thirty-six weeks~~half of ~~2022.~~2023. Cash flow used in financing activities during the first ~~thirty-six weeks~~half of ~~2023~~2024 was primarily related to the payment of dividends, repayments of short-term borrowings, and repurchases of common ~~stock, and withholding taxes on stock-based awards. In~~stock. In November 2023, the ~~first thirty-six weeks of 2022, cash flow used in financing activities included the repayment of our 2.300%~~Company's Japan subsidiary issued four Guaranteed Senior Notes ~~and the payment of dividends.~~totaling approximately $500 at fixed interest rates ranging from 1.400% to 2.120%.

Dividends

A quarterly cash dividend of $1.02 per share was declared on ~~April 19, 2023,~~January 18, 2024, payable to shareholders of record on ~~May 5, 2023,~~February 2, 2024, which was paid on ~~May 19,~~February 16, 2024. On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special cash dividend of $15.00 per share, declared on December 13, 2023.

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Share Repurchase Program

On January 19, 2023, the Board of Directors authorized a ~~new~~ share repurchase program in the amount of $4,000, which expires in January 2027. During the first ~~thirty-six weeks~~half of ~~2023~~2024 and ~~2022,~~2023, we repurchased ~~908,000~~528,000 and ~~490,000~~579,000 shares of common stock, at an average price per share of ~~$492.30~~$609.51 and ~~$523.61,~~$492.06, totaling approximately ~~$447~~$322 and ~~$257.~~$285. These amounts may differ from the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter. Purchases are made from time to time, as conditions warrant, in the open market or in block purchases, pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act. The remaining amount available to be purchased under our approved plan was ~~$3,793~~$3,241 at the end of the ~~third~~second quarter.

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Bank Credit Facilities and Commercial Paper Programs

We maintain bank credit facilities for working capital and general corporate purposes. At ~~May 7, 2023,~~February 18, 2024, we had borrowing capacity under these facilities of ~~$1,312.~~$1,237. Our international operations maintain ~~$824~~$748 of this capacity under bank credit facilities, of which ~~$174~~$164 is guaranteed by the Company. Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the consolidated balance sheets, were ~~$54 and $88~~immaterial at the end of the ~~third~~second quarter of ~~2023~~2024 and at the end of fiscal ~~2022.~~2023.

The Company has letter of credit facilities, for commercial and standby letters of credit, totaling ~~$226.~~$210. The outstanding commitments under these facilities at the end of the ~~third~~second quarter of ~~2023~~2024 totaled ~~$189,~~$184, most of which were standby letters of credit that do not expire or have expiration dates within one year. The bank credit facilities have various expiration dates, most within one year, and we generally intend to renew these facilities. The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercial letters of credit outstanding.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with U.S. GAAP requires that we make estimates and judgments. We base these on historical experience and on assumptions that we believe to be reasonable. Our critical accounting policies are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K, for the fiscal year ended ~~August 28, 2022.~~September 3, 2023. There have been no material changes to the critical accounting estimates previously disclosed in that Report.

Recent Accounting Pronouncements

~~There have been no material changes~~See discussion of Recent Accounting Pronouncements in ~~recently issued or adopted accounting standards from those disclosed~~Note 1 to the condensed consolidated financial statements included in ~~our Annual Report on Form 10-K, for the fiscal year ended August 28, 2022.~~Part I, Item 1 of this Report.

Item 3—Quantitative and Qualitative Disclosures about Market Risk

Our direct exposure to financial market risk results from fluctuations in foreign-currency exchange rates and interest rates. There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K, for the fiscal year ended ~~August 28, 2022.~~September 3, 2023.

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Item 4—Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of ~~May 7, 2023~~February 18, 2024, and, based on their evaluation, have concluded the disclosure controls and procedures were effective as of such date.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the ~~third~~second quarter of fiscal ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1—Legal Proceedings

See discussion of Legal Proceedings in Note 8 to the condensed consolidated financial statements included in Part I, Item 1 of this Report.

Item 1A—Risk Factors

In addition to the other information set forth in the Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, for the fiscal year ended ~~August 28, 2022.~~September 3, 2023. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K.

Item 2—Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

The following table sets forth information on our common stock repurchase program activity for the ~~third~~second quarter of ~~2023~~2024 (amounts in millions, except share and per share data):

Period Total Number of Shares Purchased Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Programs(1)
Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs(1)
February 13, 2022 — March 12, 2023 108,000 $ 490.87 108,000 $ 3,902
March 13, 2023 — April 9, 2023 109,000 489.45 109,000 3,849
April 10, 2023 — May 7, 2023 112,000 497.64 112,000 3,793
Total third quarter 329,000 $ 492.71 329,000


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs(1)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs(1)
November 27, 2023 — December 24, 2023	89,000	$	624.76	89,000	$	3,345
December 25, 2023 — January 21, 2024	71,000	667.23		71,000	3,297
January 22, 2024 — February 18, 2024	80,000	705.31		80,000	3,241
Total second quarter	240,000	$	664.02	240,000

_______________

(1)Our share repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in January 2023, which expires in January 2027.

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Item 3—Defaults Upon Senior Securities

None.

Item 4—Mine Safety Disclosures

Not applicable.

Item 5—Other Information

None.

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Item 6—Exhibits

The following exhibits are filed as part of this Quarterly Report on Form 10-Q or are incorporated herein by reference.

Incorporated by Reference

Exhibit
Number

Exhibit Description

Filed
Herewith

Form

Period
Ending

Filing Date

3.1

Articles of Incorporation as amended of Costco Wholesale Corporation

10-K

8/28/2022

10/5/2022

3.2

Bylaws as amended of Costco Wholesale Corporation

8-K

8/10/2023

10.1

Executive Employment Agreement effective January 1, 2024, between Ron Vachris and Costco Wholesale Corporation

10-Q

~~5/8/2022~~11/26/2023

~~6/2/2022~~12/20/2023

31.1

Rule 13(a) – 14(a) Certifications

32.1

Section 1350 Certifications

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


		COSTCO WHOLESALE CORPORATION (Registrant)

~~May 31, 2023~~March 13, 2024	By	/s/ ~~W. C~~R~~RAIG~~ON JM. V~~ELINEK~~ACHRIS
Date		~~W. Craig Jelinek~~Ron M. Vachris Chief Executive Officer, President and Director

~~May 31, 2023~~March 13, 2024	By	/s/ RICHARD A. GALANTI
Date		Richard A. Galanti Executive Vice President, Chief Financial Officer and Director

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