Costco Wholesale Corporation Reports October Sales Results

For the Third Quarter of Fiscal 2020 *Net sales decreased 7.8% to $1.6 billion compared to $1.7 billion in the third quarter of fiscal 2019 due to the impact of COVID-19. *Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19, and e-commerce sales) decreased 8.9% compared to an increase of 3.2% in the third quarter of fiscal 2019. In the third quarter of fiscal 2020, transactions declined 15.4% and average ticket increased 7.6%. *Gross profit decreased 12.5% to $545.5 million compared to $623.4 million in the third quarter of fiscal 2019. *Tax rate increased to 25.1% compared to 23.1% in the third quarter of fiscal 2019. The higher effective tax rate is primarily due to less investment tax credits received. *Net income was $74.8 million compared to $129.7 million in the third quarter of fiscal 2019. Adjusted net income was $92.5 million compared to $128.6 million in the third quarter of fiscal 2019. For the First Nine Months of Fiscal 2020 *Net sales decreased 22.4% to $4.0 billion compared to $5.1 billion in first nine months of fiscal 2019 due to the impact of COVID-19.*Comparable sales decreased 23.8% compared to an increase of 5.4% in the first nine months of fiscal 2019. During the first nine months of fiscal 2020, transactions declined 30.1% and average ticket increased 9.0%. *Gross profit decreased to $1.2 billion compared to $1.9 billion in the first nine months of fiscal 2019. *Net income was $4.3 million compared to $483.2 million in the first nine months of fiscal 2019.

Q3 2020 Headlines: *While the COVID-19 pandemic continued to impact third quarter net sales and billings performance, HMH’s continued virtual learning support for customers and decisive cost and liquidity actions helped mitigate the impact of the COVID-19 pandemic on its profitability and cash flow, and resulted in strong cash generation in the seasonally important third quarter of 2020. *Net sales declined 32% to $387 million in the third quarter, and declined 28% to $828 million on a year-to-date basis *Billings1 declined 32% to $506 million in the third quarter, and declined 33% to $934 million on a year-to-date basis *HMH concluded the Texas Literature adoption with a 34% share of the opportunity *Significant growth in digital platform usage with a 388% increase in student assignments over the last twelve months as schools continue to adjust to remote learning environment *Continued acceleration of SaaS billings growth to 147% for the last twelve months *Net cash provided by operating activities of $264 million in the third quarter, and $75 million on a year-to-date basis *Strong free cash flow2 of $237 million in the third quarter, and nearing break-even at $(11) million on a year-to-date basis

Fiscal 2020 Fourth Quarter Results Overview *Total net sales were $177.9 million, an increase of $5.4 million or 3.2%, compared to $172.5 million last year. Total comparable net sales, including both physical stores and e-commerce, increased by 2.5% compared to last year. *Operating income was $14.1 million, or 7.9% of net sales, compared to $8.5 million, or 4.9% of net sales, last year. The $5.6 million increase in operating income was primarily due to the combined impact of the factors noted above. Fiscal 2020 Full Year Results Overview *Total net sales were $531.3 million, a decrease of $88.0 million or 14.2%, compared to $619.3 million last year primarily as a result of the various periods of store closures, reduced store operating hours, and restrictions on customer traffic into physical stores resulting from the COVID-19 pandemic. *Operating loss was $(3.0) million, or (0.6)% of net sales, compared to operating income of $28.5 million, or 4.6% of net sales, last year. The decrease in operating results was primarily attributable to the impacts of the COVID-19 pandemic on the Company's business as noted above.