Costco Wholesale Corporation · NASDAQ:COST
Costco Wholesale — Shareholder Meeting (January 2023)
95 slides from Costco Wholesale's shareholder meeting presentation, Jan 19, 2023
Slide 1: Annual Meeting of Shareholders January 19, 2023
Annual Meeting of Shareholders January 19, 2023
Slide 2: Board Members
Board Members
Slide 3: Hamilton E. James
Hamilton E. James Joined the Board in 1988; Chairman of the Board since 2017 Former Executive Vice Chairman and President / Chief Operating Officer of The Blackstone Group
Slide 4: Susan L. Decker
Susan L. Decker Joined the Board in 2004 CEO and Founder of Raftr Formerly President and CFO of Yahoo Director of Berkshire Hathaway Inc., Vail Resorts, Inc., and Momentive Global Inc.
Slide 5: Kenneth D. Denman
Kenneth D. Denman Joined the Board in 2017 General Partner at Sway Ventures Formerly President and CEO of Emotient, Inc. Director of Motorola Solutions, Inc. and VMware, Inc.
Slide 6: Richard A. Galanti
Richard A. Galanti Joined the Board in 1995 Executive Vice President and Chief Financial Officer Former Director of the Federal Reserve Bank of San Francisco
Slide 7: Craig Jelinek
Craig Jelinek Joined the Board in 2010 CEO since 2012
Slide 8: Sally Jewell
Sally Jewell Joined the Board in 2020 Secretary of the Interior under President Barack Obama Former Chief Executive Officer and Director of Recreational Equipment, Inc. Director of Symetra Financial Corporation
Slide 9: Charles T. Munger
Charles T. Munger Joined the Board in 1997 Vice Chairman of the Board of Berkshire Hathaway Inc. Director of Daily Journal Corporation
Slide 10: Jeffrey S. Raikes
Jeffrey S. Raikes Joined the Board in 2008 Co-Founder of the Raikes Foundation Former CEO of the Bill & Melinda Gates Foundation Former President of Business Division at Microsoft
Slide 11: John W. Stanton
John W. Stanton Joined the Board in 2015 Chairman and Managing Partner of the Seattle Mariners Chairman of Trilogy International Partners and Trilogy Equity Partners and Director of Microsoft Founder and Former Chairman and CEO of Western Wireless Corporation Former Chairman and CEO of T-Mobile USA
Slide 12: Ron Vachris
Ron Vachris Joined the Board in 2022 President since 2022
Slide 13: Mary Agnes (Maggie) Wilderotter
Mary Agnes (Maggie) Wilderotter Joined the Board in 2015 Chairman and Chief Executive Officer of Grand Reserve Inn Former Chairman and Chief Executive Officer of Frontier Communications Chairman of the Board of Directors of DocuSign and Director of Lyft and Sana Biotechnology
Slide 14: Annual Meeting of Shareholders January 19, 2023
Annual Meeting of Shareholders January 19, 2023
Slide 15: Expansion Today
Expansion FY 2022 Warehouse Count Beginning: 815 Openings: +23 Ending: 838 Today: 847
Slide 16: San Marcos Business Center, CA
San Marcos Business Center, CA 3/17/22
Slide 17: Anjou Business Center, QC
Anjou Business Center, QC 6/8/22
Slide 18: Mibu, Japan
Mibu, Japan 6/23/22
Slide 19: College Station, TX
College Station, TX ; 8/4/22 —— =
Slide 20: Murrieta, CA
Murrieta, CA 8/5/22
Slide 21: Auckland, New Zealand
Auckland, New Zealand 9/28/22
Slide 22: Gocheok, Korea
) Gocheok, Korea 10/20/22
Slide 23: From This
SY (ML OL. AE ‘e From This
Slide 24: To This
To This
Slide 25: Stockholm, Sweden
a Stockholm, Sweden 10/27/22
Slide 26: Lake Stevens, WA
Lake Stevens, WA 12/2/22
Slide 27: Casuarina (S. Perth), Australia
Casuarina (S. Perth), Australia 12/7/22
Slide 28: Recent Warehouse Openings
Recent Warehouse Openings Riverton, UT 5/19/22 North Oshawa, ON 6/9/22 St. Augustine, FL 8/3/22 Verona (S. Madison), WI 8/17/22 Gimhae, Korea 8/25/22
Slide 29: Recent Warehouse Openings
Recent Warehouse Openings University City, MO 10/25/22 Athens, GA 11/15/22 Ankeny, IA 11/17/22 Logan, UT 11/18/22
Slide 30: Costco Today
Costco Today • 3rd largest global retailer • 11th largest in Fortune 500 • $214 billion market cap* *As of January 6, 2023
Slide 31: Costco Today
Costco Today • Sales $223B – FY’22 • 124MM sq. ft. (146K / whse) • 304K employees worldwide
Slide 32: Costco Today
Costco Today 847 Warehouses Worldwide 583 - U.S. 14 - Australia 107 - CN 4 - Spain 40 - Mexico 2 - France 31 - Japan 2 - China 29 - UK 1 - Iceland 18 - Korea 1 - New Zealand 14 - Taiwan 1 - Sweden
Slide 33: Costco Today
Costco Today (as of November 20, 2022) • 67MM member households • 121MM cardholders • 90.4% worldwide renewal rate • $4.3B in membership fees (LTM)
Slide 34: Fiscal Year
Fiscal Year (in MM’s except for EPS) 2021 2022 Sales $192,052 $222,730 Net Income $5,007 $5,844 Diluted E.P.S. $11.27 $13.14
Slide 35: 1st Quarter
1st Quarter (in MM’s except for EPS) 2022 2023 Sales $49,417 $53,437 Net Income $1,324 $1,364 Diluted E.P.S. $2.98 $3.07
Slide 36: Comp Traffic (Frequency)
Comp Traffic (Frequency) FY’09 –’19 4.1% FY’20 0.9% FY’21 7.0% FY’22 7.5% FY’23 – Q1 3.9%
Slide 37: Electronics
Electronics FY’22 Global TV Sales +5%
Slide 38: Apparel
FY’22 Global Apparel Sales +12%
Slide 39: Jewelry
500K+ Carats of Diamonds Jewelry Sold Globally in FY’22
Slide 40: Beer, Wine, and Spirits
Beer, Wine, and Spirits FY’22 Global Sales +3%
Slide 41: Produce
Produce FY’22 Global Sales +7%
Slide 42: Bakery
Bakery FY’22 Global Sales +16%
Slide 43: Meat & Seafood
Meat & Seafood FY’22 Global Sales +5%
Slide 44: Service Deli
Service Deli 117MM Rotisserie Chickens Sold Globally in FY’22
Slide 45: Merchandise Highlights
CosTco Merchandise Highlights
Slide 46: New Brands
New Brands FLEXSTEEL FRYE Mubar tidus | LYVE NATION | Me a aTH REMODEL wy DIAMONDBACK 3: x Hydro Flask Zesty Pau, Calvin Klein ADELTA eB lyfe WELLNESS PET COMPANY Vf W AUTHENTIC WAGYU Hurley )(
Slide 47: Deli Sushi Program
Deli Sushi Program Nigiri Roll Family Pack Spicy Tuna & Salmon Sushi Crunch Roll Combo 40ct 20ct 20ct $28.99 $19.99 $13.99
Slide 48: Kirkland Signature
Kirkland Signature KS Caramel S’Mores Clusters KS Roasted Almonds Sell: $9.49 Sell: $9.99 Comp: $11.99 Comp: $13.68 Savings: 20% Savings: 27%
Slide 49: Kirkland Signature
Kirkland Signature KS Chunks & Gravy KS Lavender Wet Cat Food Laundry Scent Beads Sell: $26.99 Sell: $9.99 Comp: $69.60 Comp: $17.99 Savings: 61% Savings: 44%
Slide 50: Kirkland Signature
Kirkland Signature KS Organic Margarita KS Moscato D’ Asti KS Reposado Tequila Mix - 2 / 1.75L Sell: $7.99 Sell: $17.99 Sell: $8.49 Comp: $10.99 Comp: $55.99 Comp: $31.49 Savings: 27% Savings: 68% Savings: 72%
Slide 51: Kirkland Signature
Kirkland Signature KS Aerosol Light Whip Cream KS Organic Pine Nut Hummus Sell: $5.49 Sell: $5.99 Comp: $7.93 Comp: $12.49 Savings: 31% Savings: 52%
Slide 52: Kirkland Signature
Kirkland Signature Cherry Cheese Pastry Gyro Kit Sell: $9.99 Sell: $6.49/lb Comp: None Comp: $8.38/lb Savings: 23%
Slide 53: Kirkland Signature
Kirkland Signature KS 5 Burner + Top Sear Burner Grill BBQ Hardwood Pellets Sell: $899.99 Sell: $12.99 Comp: $1399.99 Comp: $24.99 Savings: 36% Savings: 48%
Slide 54: KS Cashew Packaging Progression
KS Cashew Packaging Progression 1995 2008 2009 2022 2022 Kirkland Signature Kirkland Signature New KS Embossed Jar Reduced Plastic V4 Bag Conversion Cashews Rolled Out Jar conversion to 95g Weight 5% Reduction 85g Weight 10.5% 85% Reduced Plastic to Jar. Overall One of the first Kirkland square jar
Slide 55: Korea Bakery | Plastic Reduction
Korea Bakery | Plastic Reduction Annual plastic savings for Bakery = 400K LBS Plastic Box New Paper Box + Compostable Film
Slide 56: Global Collaboration
Global Collaboration Boba Milk Tea Shredded Squid Sea Temple Baked Scallop From: Taiwan From: Thailand Hanwoomul shrimp Fried Rice From: Japan From: Korea Nuchar Cooked LXZ Chicken Essence 30pk Taiyaki Variety 30ct Seaweed Salad 35.3oz Octopus Tentacles From: Taiwan From: South Korea From: Korea Fro
Slide 57: Costco Online
Costco Online U.S. UK Canada Taiwan Mexico Korea Australia Japan
Slide 58: E-Commerce
E-Commerce Complement the core warehouse Convenience of big & bulky purchases Grocery Online Expanded selection year round Delivery + installation available Same Day Delivery available Expand the Costco “Treasure Hunt”
Slide 59: Costco Next
Costco Next Get more of what you want with… Exclusive Members Only Values on an expanded selection of goods curated by our buyers, directly from brands that you trust through Costconext.com or linkout through Costco.com
Slide 60: Costco Next
Costco Next ● Home Improvement ● Electronics & Accessories ● Beauty ● Outdoor Recreation ● Apparel ● Sports & Bicycles ● Luggage & Handbags ● Art ● Home & Kitchen ● Toys ● Pet ● Many more to come…
Slide 61: And MORE…
Cosco | NEXT ‘THOMAS 8 KINKADE @: ) Priority sicyctes CASE*MATE ON Stati - & CUCKOO stupicsHeo (ORES ‘L,
Slide 62: Grocery Online Options
Options CostcoGrocery a) 2-Day Delivery Cold & Frozen Delivery Same-Day Delivery 2-Day Delivery Cold & Frozen Delivery All groceries including fresh, frozen and Non-perishable food and household essentials. Select cold and frozen delivered to your home household essentials. or small business.
Slide 63: Exciting Merchandise
Exciting Merchandise Samsung Bespoke French Door Patrick Mahomes La Prairie Firming Face Refrigerator Signed Helmet Treatment Sell: $3,099.99 Sell: $1,299.99 Sell: $1,489.99
Slide 64: One of a Kind
One of a Kind 4.09ct Pear Shape Diamond Ring 7.55ct Fancy Yellow Diamond Ring 4.01ct Radiant Diamond Ring Sell: $89,999.99 Sell: $89,999.99 Sell: $84,999.99
Slide 65: Gift Cards & Tickets Online
Gift Cards & Tickets Online DoorDash 2 x $50 Super Bowl LVII Southwest Airlines $500 eGift Card Packages eGift Card $89.99 Packages Ranging $449.99 Sold out in 3 Days! $9,999.99 - $42,999.99
Slide 66: Mobile app
a 2 hop Same Day Deals Quick Ship Quick Actions my Warehouse Daler Location 9 Seattle @ sero ‘ CHRISTMAS Mobile app Membership #111906647142 ‘Your digital membership card cannot be used at Costco gas Payment Methods VISA 1234 Membership Detals [==] 2% Reward Savings curently viewing savings avaible
Slide 67: Mobile app
Mobile app Features New Enhancements for 2023 ● Shop Online ● Warehouse Inventory Online ● Digital Membership Card with ● Notification Inbox Costco Citi Visa Card ● In-Warehouse Mode ● Quick Actions ● Search Enhancements ● Location with gas prices ● 'How to Use App' Walkthrough ● Departments in Shop
Slide 68: Costco Depots
Costco Depots 26 Global Depot Campuses 8 Regions 18 Ecom Fulfillment Centers 22 Return Depots/DDCs 10 DDC Locations
Slide 69: Costco Logistics
Costco Logistics ● Increased member service level - room of choice or white glove ● Reduced ship time with forward deployed goods ● Lower member prices with full cost transparency/control ● Expand our online categories while controlling the delivery experience
Slide 70: Costco Logistics
Costco Logistics ● $3.76B in sales on 3.2MM shipments - Average sale $1,170 ● 10 middle mile distribution centers with over 11MM Square Feet ● 121 final mile delivery facilities including AK, HI, and Puerto Rico ● ~700 home delivery trucks on the road delivering six days a week
Slide 71: Costco Logistics
Costco Logistics
Slide 72: Costco Logistics
Costco Logistics
Slide 73: Business Centers
Business Centers 23 U.S. Locations 6 Canada Locations - Walk in / delivery for business members - eCommerce fulfillment – Online Dry Grocery
Slide 74: Pharmacy
Pharmacy 56MM Prescriptions Filled Globally in FY’22
Slide 75: FY'22 Immunization Program
FY’22 Immunization Program (All Immunizations) Immunization FY’22 Covid 2.4MM Influenza 881K Shingrix 155K Total 3.5MM
Slide 76: Optical
Optical 8.2MM Pairs of Glasses Sold Globally in FY’22
Slide 77: Food Court
Food Court 156MM Hot Dog & Soda Combos Sold Globally in FY’22
Slide 78: Gasoline
Gasoline Global Gallon Sales +22% in FY’22
Slide 79: Tire Center
Tire Center 10MM Tires Sold Globally in FY’22
Slide 80: Sustainability
CosTco Sustainability
Slide 81: Sustainability Commitment Updated December 2022
Sustainability Commitment Updated December 2022
Slide 82: Sustainability Commitment
Sustainability Commitment Four pillars: – People & Communities – supporting the people impacted by our business – Operations - maintaining efficiencies in an environmentally responsible manner – Merchandising - strategically sourcing merchandise in a sustainable manner – Climate Action Plan – doing
Slide 83: Sustainability Commitment: Employees
Sustainability Commitment Employees • 304,000 employees worldwide • Premium benefits • Industry leading compensation – $26/hr average hourly wage in U.S. – $31+/hr for 10 year service clerk in U.S. • Benefits for full-time and part-time employees – 89% eligible in the U.S.; 97% of eligible employees
Slide 84: Sustainability Commitment: Communities
Sustainability Commitment Communities • 1% of pretax profit donated, over $65MM in 2022: United Way, Red Cross, Children’s Hospitals • Black Economic Development Fund - $25MM investment • Feeding America – $5.5MM in cash grants and 90MM pounds of food and other products donated • World Vision - $278
Slide 85: Sustainability Commitment: Operations
Sustainability Commitment Operations • Remain efficient, low-cost operators • Expanding our “STAR” program globally to help us: – Remain in Compliance with regulations – Reduce Water Usage – Reduce Energy Usage – Reduce Waste – Reduce Emissions
Slide 86: Sustainability Commitment: Merchandise
Sustainability Commitment Merchandise • Introduced the 6 Questions we ask our suppliers: – Can you map your supply chain? – How are the people treated? – How are the animals treated? – How is the environment treated – with focus on water, forestry, and fisheries? – Is the best possible packaging bei
Slide 87: Sustainability Commitment: Climate Action Plan
Sustainability Commitment Climate Action Plan - Met all milestones in our Climate Action Plan while supporting 7 UN Sustainable Development Goals - Reduced Scope 1 and 2 absolute emissions from operations and increased our Reduction Commitment from 20% to 39% by 2030 - Determined global Scope 3 emis
Slide 88: Financial Position (MM's)
Financial Position (MM’s) Q1, FY’23 Cash, Equiv, & Short-Term Inv. $11,673 Property & Equipment (net) $25,144 Long-Term Debt $6,543 Stockholders’ Equity $21,476
Slide 89: Dividends
Dividends • Initiated May 2004 at $0.40 per year • Currently at $3.60 per year • Growth Rate 13% per year • $1.6B annually • Four special dividends in the last ten years
Slide 90: Stock Repurchase
Stock Repurchase as of Fiscal Year End 2022 • Program inception – Fiscal Year 2005 • $10.1B total expenditure • 133.5 million shares retired • $75.96 average cost per share • $442MM in FY’22 (avg $511.44/share)
Slide 91: Expansion
Expansion New (net) FY’19 20 FY’20 13 FY’21 20 FY’22 23 FY’23(E) 24
Slide 92: Company Annual Growth
Company Annual Growth (Since Dec ’85) Net Sales 12.4% Net Income 13.4% Stock Price 17.1% S & P 500 8.7%
Slide 93: Annual Meeting of Shareholders January 19, 2023
Annual Meeting of Shareholders January 19, 2023
Slide 94: Slide 94
Slide 95: Annual Meeting of Shareholders January 19, 2023
Annual Meeting of Shareholders January 19, 2023
Costco Wholesale — Shareholder Meeting (January 2023) on 6ix