Costco Wholesale : Annual Report for the FY ended on 12/31/2024

2024

ANNUAL REPORT

FISCAL YEAR ENDED SEPTEMBER 1, 2024

December 11, 2024

Dear Costco Shareholders,

The merchandise and services we sell are the lifeblood of our business. And our appeal to our members is possible only because of the dedication and experience of our employees. As we've done in the past on a frequent basis, in fiscal 2024 we rewarded our employees by increasing wages across our pay scales in the U.S. and Canada and other parts of the world. The stability of a cared-for employee base means our members experience courtesy and friendliness whenever they visit a warehouse, which constitutes one of our strongest competitive advantages.

Net sales for 2024 totaled $249.6 billion, an increase of 5%. Net income was $7.4 billion, or $16.56 per diluted share, an increase of 17%. Revenue from membership fees increased 5% to $4.8 billion, and our membership base grew to nearly 137 million cardholders, with a 90% renewal rate. These results are based on 52 weeks compared to 53 weeks in the prior year. In January 2024, we paid a special cash dividend of $15 per share or $6.65 billion. Costco's expansion in fiscal 2024 included opening 29 net new locations: 23 in the U.S., two each in China and Japan, and one each in Canada and Korea.

Our global buying staff is relentless in their focus on bringing increased everyday value to our members by offering quality products at the lowest possible prices. They do this by working with our suppliers and logistics providers to reduce the cost of our items and collaborating globally to identify new and exciting items, including a growing number of high-quality products from diverse cultures. We continue to reinforce Costco's foundation in limiting the number of items that we sell, focusing on the most productive items, and bringing goods to market in volume. These actions have allowed us to continue passing on savings.

Our long-term objectives are to stay focused on our core values and remain relevant for future generations. We do this through: optimizing member value; expanding Kirkland SignatureTM (KS) penetration; conveying discovery and newness in our offerings; and cultivating and improving the member digital experience. In July, we announced our first membership fee increase in seven years, increasing our Gold Star Membership by $5 and our Executive Membership by $10. We are committed to investing these incremental membership fees to provide a better experience for members and employees. True to our long-held values, by taking care of our members and employees in this way, we expect this in turn to deliver value for our shareholders.

The KS brand continued to show strong global growth. We introduced several new items in fiscal 2024, such as rotations in our foods categories-breaded chicken chunks, pasta and meatballs, celery grain salad, and banana cream pie. We expanded our pet food selection and our laundry innovations. In non- foods, we introduced whey protein, expanded our golf line, and delivered a wider range of apparel. We have exciting offerings planned for fiscal 2025, as we continue to invest in and expand the KS brand.

To ensure product for future growth, we pursue diversification in our supply-chain and seek to expand in-country production. We also continue to focus on sustainability. In packaging, for example, we continued converting more of our KS nut items from jars to bags. These changes save over $8 million and eliminate over 4 million pounds of plastic annually-showing how sustainability translates into good business. We also implemented a program to monitor practices and standards at all our warehouses, depots and business delivery locations, including environmental compliance, water usage, energy consumption, emissions, and waste diversion. We aim to drive conservation habits in each location and divert at least 80% of items that might end up in a landfill, through donations, recycling, and composting.

We operate eight e-commerce sites around the world, and global sales grew 16% this past year. E-commerce provides an additional treasure-hunt experience and offers expanded selections in areas such as precious metals, tickets, experiences, vacations, appliances, home furnishings, consumer electronics, lawn and garden, health and beauty aids, apparel, and grocery. Costco NEXT (costconext.com), our curated online marketplace, also continues to grow, with over 86 supplier sites linked from Costco.com, providing members a wider array of items, at a value negotiated by Costco buyers. We continue to make significant improvements to the Costco App-increasing response speed and reliability and adding key features such as the ability to search U.S. warehouse inventory, access online receipts, and maintain a digital membership card and wallet.

In February 2024, we announced that our CFO, Richard Galanti, would retire, effective January 2025. During his nearly forty-year tenure as CFO, Richard made innumerable and invaluable contributions to Costco's success and was widely respected among shareholders, employees, and business partners. His long-standing dedication, leadership and enduring legacy will continue to inspire us. Gary Millerchip, was appointed CFO in March and has been working alongside Richard for the past several months. We are looking forward to benefiting from Gary's extensive retail and finance expertise, and he has already proven to be an excellent fit with our company's culture.

Finally, I would like to express my deep appreciation to our more than 333,000 Costco employees and nearly 137 million members across the globe for their loyalty and trust in our company. I wish you prosperity and happiness in the year to come.

Sincerely,

Ron MVachris

President and Chief Executive Officer

897 locations as of December 31, 2024

UNITED

STATES

COSTCO.COM

ALABAMA - 5

ALASKA - 5

ARIZONA - 20

ARKANSAS - 1 CALIFORNIA - 140 COLORADO- 16

CONNECTICUT - 8 DELAWARE - 1 FLORIDA - 33 GEORGIA - 17 HAWAII - 7 IDAHO- 7 ILLINOIS - 23 INDIANA - 9 IOWA - 4 KANSAS - 3 KENTUCKY - 4

LOUISIANA - 4 MAINE - 1 MARYLAND - 11

MASSACHUSETTS - 6 MICHIGAN - 17 MINNESOTA - 14

MISSISSIPPI - 1

MISSOURI - 9

MONTANA - 5

NEBRASKA - 4

NEVADA - 8

NEW HAMPSHIRE - 1 NEW JERSEY - 21

NEW MEXICO - 3

NEW YORK - 19

NORTH CAROLINA - 10 NORTH DAKOTA - 2 OHIO - 13 OKLAHOMA - 4 OREGON - 13 PENNSYLVANIA - 11

SOUTH CAROLINA - 6 SOUTH DAKOTA - 1 TENNESSEE - 8 TEXAS - 40

UTAH - 14 VERMONT - 1 VIRGINIA - 17 WASHINGTON - 34 WISCONSIN - 11 WASHINGTON, D.C. - 1

PUERTO RICO - 4

Canada

109

United States and

Puerto Rico	617

México

41

MÉXICO		CANADA
COSTCO.COM.MX
AGUASCALIENTES - 1	NUEVO LEÓN - 3	COSTCO.CA
BAJACALIFORNIA - 4	PUEBLA - 1	ALBERTA - 19
BAJACALIFORNIA SUR - 1	QUERÉTARO - 1	BRITISH COLUMBIA - 14
CHIHUAHUA - 2	QUINTANA ROO - 1	MANITOBA - 3
CIUDAD DE MÉXICO - 5	SAN LUIS POTOSÍ - 1	NEW BRUNSWICK - 3
COAHUILA - 2	SINALOA- 1	NEWFOUNDLAND AND
GUANAJUATO - 3	SONORA - 1	LABRADOR - 1
JALISCO - 3	TABASCO - 1	NOVA SCOTIA - 2
MÉXICO - 5	VERACRUZ- 2	ONTARIO - 41
MICHOACÁN - 1	YUCATÁN - 1	QUÉBEC - 23
MORELOS - 1		SASKATCHEWAN - 3

1

Japan

36

Korea

19

Taiwan

14

China

Iceland

1

United

29 Kingdom

France

7

2

Spain

UNITED

KINGDOM

COSTCO.CO.UK

ENGLAND - 25

SCOTLAND - 3

WALES - 1

ICELAND

KAUPTÚN - 1

SPAIN

ANDALUCÍA - 1

BISCAY - 1

MADRID - 2

ZARAGOZA - 1

FRANCE

ÎLE-DE-FRANCE - 2

SWEDEN

STOCKHOLM - 1

KOREA

COSTCO.CO.KR BUSAN - 1 CHEONAN - 1 DAEGU - 2 DAEJEON - 1 GIMHAE - 1 GYEONGGI-DO - 5 INCHEON - 2 SEJONG - 1 SEOUL - 4 ULSAN - 1

JAPAN

COSTCO.CO.JP AICHI - 2 CHIBA - 3 FUKUOKA- 3 GIFU - 1 GUNMA - 2

HIROSHIMA - 1 HOKKAIDO - 2 HYOGO - 2 IBARAKI - 2 ISHIKAWA -1 KANAGAWA - 3 KUMAMOTO - 1 KYOTO - 1 MIYAGI - 1 OSAKA - 2 SAITAMA - 2 SHIZUOKA - 1 TOCHIGI- 1 TOKYO - 1 TOYAMA - 1 YAMAGATA - 1 OKINAWA - 1 SHIGA - 1

Australia

15

CHINA

SHANGHAI - 2

JIANGSU - 2

ZHEJIANG - 2

GUANGDONG - 1

TAIWAN

COSTCO.COM.TW

CHIAYI CITY - 1

HSINCHU CITY - 1

KAOHSIUNG CITY - 2

NEWTAIPEI CITY - 3

TAICHUNG CITY - 2

TAINAN CITY - 1

TAIPEI CITY - 2

TAOYUAN CITY - 2

New

Zealand

1

AUSTRALIA

COSTCO.COM.AU

AUSTRALIAN CAPITAL

TERRITORY - 1

NEWSOUTH WALES - 4

QUEENSLAND - 3

SOUTH AUSTRALIA - 1

VICTORIA - 4

WESTERN AUSTRALIA - 2

NEW ZEALAND

AUCKLAND - 1

COR000296 0724

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended September 1, 2024

or

• 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	(I.R.S. Employer Identification No.)
incorporation or organization)

999 Lake Drive, Issaquah, WA 98027

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: [phone]

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

Title of each class	Trading Symbol	Name of each exchange on
which registered
Common Stock, $.005 Par Value	COST	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the Section 15(d) of the Act. Yes ☐

registrant is not required to file reports pursuant to Section 13 or No ☒

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financials statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 18, 2024 was $320,635,374,592.

The number of shares outstanding of the registrant's common stock as of October 1, 2024, was 443,073,537.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on January 23, 2025, are incorporated by reference into Part III of this Form 10-K.

COSTCO WHOLESALE CORPORATION

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 1, 2024

	TABLE OF CONTENTS
		Page
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	18
Item 1C.	Cybersecurity	18
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Mine Safety Disclosures	20
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
	Purchases of Equity Securities	20
Item 6.	Reserved	21
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of
	Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 8.	Financial Statements and Supplementary Data	32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial
	Disclosure	61
Item 9A.	Controls and Procedures	61
Item 9B.	Other Information	62
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	62
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	62
Item 11.	Executive Compensation	62
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related
	Stockholder Matters	62
Item 13.	Certain Relationships and Related Transactions, and Director Independence	62
Item 14.	Principal Accounting Fees and Services	62
PART IV
Item 15.	Exhibits, Financial Statement Schedules	63
Item 16.	Form 10-KSummary	66
	Signatures	67

3

INFORMATION RELATING TO 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, investments in technology, strategic direction, expense controls, membership renewal rates, shopping frequency, litigation, attainment of sustainability goals, 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, including, without limitation, the factors set forth in the section titled "Item 1A-Risk Factors", and other factors noted in the section titled "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the consolidated financial statements and related notes in Item 8 of this Report. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements, except as required by law.

PART I

Item 1-Business

Costco Wholesale Corporation and its subsidiaries (Costco or the Company) began operations in 1983, in Seattle, Washington. We are principally engaged in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. Costco operated 890, 861, and 838 warehouses worldwide at September 1, 2024, September 3, 2023, and August 28, 2022. The Company operates e-commerce sites in the U.S., Canada, Mexico, the U.K., Korea, Taiwan, Japan, and Australia. Our common stock trades on the NASDAQ Global Select Market, under the symbol "COST."

We report on a 52/53-week fiscal year, consisting of thirteen four-week periods and ending on the Sunday nearest the end of August. The first three quarters consist of three periods each, and the fourth quarter consists of four periods (five weeks in the thirteenth period in a 53-week year). The material seasonal impact in our operations is increased net sales and earnings during the winter holiday season. References to 2024 and 2022 relate to the 52-week fiscal years ended September 1, 2024, and August 28, 2022. References to 2023 relate to the 53-week fiscal year ended September 3, 2023.

General

We operate membership warehouses and e-commerce sites 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 buy most of our merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to our warehouses. Our depots receive large shipments from suppliers and quickly ship these goods to warehouses. This process creates freight volume and handling efficiencies, lowering costs associated with traditional multiple-step distribution channels. Our e-commerce operations ship merchandise through our depots and logistics operations, as well as through drop-ship and other delivery arrangements with our suppliers.

4