Costco WholesaleCOST

01Renewal rates above 90% demonstrate that members perceive ongoing value exceeding the annual fee, creating a recurring revenue stream that compounds as the member base grows. The ability to raise fees (September 2024) without materially impairing renewals suggests latent pricing power in the membership itself, distinct from merchandise margin.

02We operate profitably at significantly lower gross margins than most other retailers Gross margin percentage excluding gasoline was 11.26% in Q3 and 11.18% year-to-date We often sell inventory before we are required to pay for it, even while taking advantage of early payment discounts Net cash provided by operating activities increased due to reduced net investment in merchandise inventories from faster inventory turns and improved payment terms with suppliers

03Comparable sales were positively impacted by increases of approximately 7% and 5% in average ticket and 2% and 3% in shopping frequency in the third quarter and first thirty-six weeks of 2026 Our philosophy is to provide members with quality goods and services at competitive prices. We seek to maintain what we believe is a perception among our members of our 'pricing authority' Generating comparable sales growth is foremost a question of making available the right merchandise at the right prices, a skill that we believe we have repeatedly demonstrated over the long-term

04We opened 16 new warehouses, including two relocations, in the first thirty-six weeks of 2026, and plan to open 13 additional in the remainder of fiscal 2026 We spent $4,228 on capital expenditures and intend to spend approximately $6,500 during fiscal 2026 These expenditures are expected to be financed with cash from operations, cash and cash equivalents, and short-term investments Cash and cash equivalents and short-term investments were $19,996 at May 10, 2026