Costco Wholesale Corporation · NASDAQ:COST
Costco Wholesale — Shareholder Meeting (January 2022)
94 slides from Costco Wholesale's shareholder meeting presentation, Jan 20, 2022
Slide 1: Annual Meeting of Shareholders
Annual Meeting of Shareholders January 20, 2022
Slide 2: Board Members: Hamilton E. James
Board Members Hamilton E. James Joined the Board in 1988; Chairman of the Board since 2017 Formerly President and Chief Operating Officer of The Blackstone Group; now Executive Vice Chairman
Slide 3: Board Members: Susan L. Decker
Board Members Susan L. Decker Joined the Board in 2004 CEO and founder of Raftr Formerly President and CFO of Yahoo Director of Berkshire Hathaway Inc. and Vail Resorts, Inc.
Slide 4: Board Members: Kenneth D. Denman
Board Members Kenneth D. Denman Joined the Board in 2017 Formerly President and CEO of Emotient, Inc. Director of Motorola Solutions, Inc. and VMWare, Inc.
Slide 5: Board Members: Richard A. Galanti
Board Members 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 6: Board Members: Craig Jelinek
Board Members Craig Jelinek Joined the Board in 2010 President since 2010 and CEO since 2012
Slide 7: Board Members: Sally Jewell
Board Members 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. (REI) Director of Symetra Financial Corporation
Slide 8: Board Members: Charles T. Munger
Board Members Charles T. Munger Joined the Board in 1997 Vice Chairman of the Board of Berkshire Hathaway Inc. Chairman of the Board of Daily Journal Corporation
Slide 9: Board Members: Jeffrey S. Raikes
Board Members 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 10: Board Members: John W. Stanton
Board Members John W. Stanton Joined the Board in 2015 Chairman and Managing Partner of the Seattle Mariners Founder and former Chairman and CEO of Western Wireless Corporation Former Chairman and CEO of T-Mobile USA (formerly VoiceStream Wireless Corporation) Director of Microsoft and Chairman of T
Slide 11: Board Members: Maggie Wilderotter
Board Members 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 DocuSign and Director of Hewlett Packard Enterprise, Lyft, and Sana Biotechnology
Slide 12: Retiring Board Member Emeritus
Retiring Board Member Emeritus
Slide 13: Rick Libenson
Rick Libenson Costco Director from 1993 to 2017 Director Emeritus from 2018 to 2022 A Co-Founder, Director and Executive Officer of The Price Company from 1976 to 1993 Thank you, Rick!
Slide 14: Annual Meeting of Shareholders
Annual Meeting of Shareholders January 20, 2022
Slide 15: Expansion Today
Expansion FY 2021 Warehouse Count Beginning: 795 Openings: +20 Ending: 815 Today: 828
Slide 16: St. Catharines Business Center, ON
St. Catharines Business Center, ON 4/8/21
Slide 17: Ishikari, Japan
- ‘ats rat ie ar — os. Ishikari, Japan 4/22/21
Slide 18: Moriyama, Japan
Moriyama, Japan 7/8/21
Slide 19: Murfreesboro, TN
Murfreesboro, TN 7/20/21
Slide 20: Little Rock, AR
Little Rock, A 7/21/24 Gea 7
Slide 21: Moore, OK
Moore, OK 7/22/21
Slide 22: Lake Macquarie, Australia
Lake Macquarie, Australia 9/21/21
Slide 23: Stafford Business Center, TX
Stafford Business Center, TX 10/20/21
Slide 24: S. Windsor, CT
ee eee S. Windsor, CT 11/16/21
Slide 25: Garner, NC
Garner, NC 11/17/21
Slide 26: Santa Fe, Mexico
Santa Fe, Mexico 11/23/21
Slide 27: Pontault Combault, France
Pontault Combault, France 12/4/21
Slide 28: Suzhou, China
Suzhou, China 12/8/21
Slide 29: Bilbao, Spain
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Slide 30: Melbourne, FL
Melbourne, FL 12/9/21
Slide 31: Recent Warehouse Openings
Recent Warehouse Openings Gloucester Bus. Center, ON 3/4/21 Dallas, GA 3/11/21 Kumamoto, JP 4/1/21 W. Edmonton Bus. Center, AB 4/6/21 Springfield, MO 8/18/21
Slide 32: Recent Warehouse Openings
Recent Warehouse Openings NE Naperville, IL 8/19/21 San Antonio, TX 9/23/21 Duluth, MN 10/28/21 Avon, IN 10/29/21 Pooler, GA 11/18/21
Slide 33: Costco Today
Costco Today • 3rd largest global retailer • 12th largest in Fortune 500 • $238 billion market cap* *As of January 7, 2022
Slide 34: Costco Today
Costco Today • Sales $192B – FY’21 • 120MM sq. ft. (146K / whse) • 288K employees worldwide
Slide 35: Costco Today: Warehouses Worldwide
Costco Today 828 Warehouses Worldwide 572 - U.S. 14 - Taiwan 105 - CN 13 - Australia 40 - Mexico 4 - Spain 30 - Japan 2 - France 29 - UK 2 - China 16 - Korea 1 - Iceland
Slide 36: Costco Today: Membership
Costco Today (as of November 21, 2021) • 62.5MM member households • 113.1MM cardholders • 89.0% worldwide renewal rate • $4.0B in membership fees (TTM)
Slide 37: FY'21 Highlights
FY’21 Highlights • Record Sales & Earnings (16% comp sales increase) • Membership income hit a record $3.9B, with renewal rates also hitting records of 91% for US and Canada, and 89% worldwide • Merchants and Operators managed supply chain and labor challenges exceptionally • Special cash dividend o
Slide 38: Fiscal Year Sales and Net Income
Fiscal Year (in MM’s except for EPS) 2020 2021 Sales $163,220 $192,052 Net Income $4,002 $5,007 E.P.S. $9.02 $11.27
Slide 39: 1st Quarter Sales and Net Income
1st Quarter (in MM’s except for EPS) 2021 2022 Sales $42,347 $49,417 Net Income $1,166 $1,324 E.P.S. $2.62 $2.98
Slide 40: Traffic (Frequency)
Traffic (Frequency) FY’09 –’19 4.1% FY’20 0.9% FY’21 7.0% FY’22 – Q1 6.8%
Slide 41: Electronics
Electronics Global TV Sales +25% in FY’21
Slide 42: Global Apparel Sales
Global Apparel Sales +22% in FY’21
Slide 43: Jewelry
475K Carats of Diamonds Jewelry sold Globally in FY’21
Slide 44: Beer, Wine, and Spirits
FY’21 Global Sales Beer, Wine, and Spirits $6.4B +16%
Slide 45: Produce
Produce FY’21 Global Sales $9.7B Sourcing from 44 countries
Slide 46: Bakery
Bakery FY’21 Global Sales +14%
Slide 47: Meat Department
Meat Department FY’21 Global Sales $12.0B
Slide 48: Service Deli
Service Deli 106MM Rotisserie Chickens sold globally in FY’21
Slide 49: Merchandise Highlights
CosTco Merchandise Highlights
Slide 50: New Brands
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Slide 51: September Non-Traditional Fall Items
September | Non-Traditional Fall Items Body Glove iSUP Beacon Inflatable Kayak Sell: $399.99 Sell: $499.99 Comp: $649.99 Comp: $999.99
Slide 52: October Non-Traditional Fall Items
October | Non-Traditional Fall Items Ladies’ Disc Brake Bike Men’s Disc Brake Bike Sell: $249.99 Sell: $249.99 Comp: $349.99 Comp: $349.99
Slide 53: November Non-Traditional Fall Items
November | Non-Traditional Fall Items Rio Hammock Chair Bestway Inflatable Hot Tub Sell: $44.99 Sell: $379.99 Comp: $79.99 Comp:$599.99
Slide 54: Kirkland Signature
Kirkland Signature 3 Piece Pan Set 4 Pack Furnace Filter Sell: $29.99 Sell: $29.99 Comp: $149.99 Comp: $79.88 Savings: 80% Savings: 63%
Slide 55: Kirkland Signature
Kirkland Signature Ladies’ Spa Robe Logo Crewneck Sweatshirt Sell: $24.99 Sell: $18.99 Comp: $130 Comp: N/A Savings: 81% Unisex Sizing
Slide 56: Kirkland Signature
Kirkland Signature Hard Setzer Kentucky Bourbons Sell: $20.99 Sell: $18.99 Sell: $23.99 Sell: $29.99 Comp: $29.99 Comp: $37.92 Comp: $45.32 Comp: $51.98 Savings: 33% Savings: 49% Savings: 47% Savings: 42%
Slide 57: Kirkland Signature
Kirkland Signature 8 in 1 Dog Supplement French Roast Coffee Sell: $29.99 Sell: $9.99 Comp: $64.99 Comp: $17.99 Savings: 54% Savings: 44%
Slide 58: Global Treasure Hunt
Global Treasure Hunt
Slide 59: Costco Online
Costco Online Regional Websites U.S UK Canada Taiwan Mexico Korea Australia Japan
Slide 60: 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 61: Costco Next
Costco Next ● Expanded selection of goods through an innovative marketplace to add member value ● Link out from Costco.com to co-branded vendor sites ● Expanded assortment of curated items from Costco’s trusted suppliers ● Exclusive Members Only Values ● Top quality from top brands
Slide 62: Costco Next
Costco Next ● Home Improvement ● Electronics & Accessories ● Apparel ● Outdoor Recreation ● Luggage & Handbags ● Sports & Bicycles ● Home & Kitchen ● Art ● Pet ● Toys ● Many more to come…
Slide 63: And MORE…
THOMAS g KINKADE Cerliow =} MIKASA. P PRIORITY BICYCLES ANKER ZWILLING® e And MORE... COSTCO | NEXT ALLBRANDS MEMBER SERVICES ABOUT COSTCO.COM Buy direct from SELECT Costco suppliers AllBrands Brands by Name~ Brands by Category + Home Improvement Learn More > urbanwoodcraft
Slide 64: Grocery Online
€oOsTee Grocery Online Options CostcoGrocery Same-Day Delivery 2-Day 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 smail b
Slide 65: Exciting Merchandise
Exciting Merchandise 83” LG OLED TV INTENSE Bikes Medano Studio Shed Sell: $5,799.99 Sell: $3,249.99 Sell: $16,999.99 DUXIANA DUX 8008 Mattress Herman Miller Eames Chair iMac 24” Sell: $12,499.99 Sell: $4,499.99 Sell: $1,649.99
Slide 66: One of a Kind
One of a Kind 7.45ct Round 11.52ct Cushion Cut Fancy 7.04ctw Emerald Cut Diamond Ring Yellow Diamond Earrings Three Stone Ring Sell: $364,999.99 Sell: $139,999.99 Sell: $118,999.99
Slide 67: Mobile app
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Slide 68: Mobile app
Mobile app Features: Coming Soon: ● Shop online ● Warehouse Inventory Online ● Digital Membership Card ● Proximity Beacons - In ● Digital Payment with the Warehouse Costco Anywhere Visa Card ● Newest Features Highlighted ● Warehouse & Online Receipts upon App Launch - Onboarding ● Quick Actions ● Or
Slide 69: Costco Logistics
Costco Logistics ● Increases member service level - room of choice or white glove ● Reduce 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: Member Delivery
Costco Logistics Member Delivery
Slide 71: Freight
Freight Steamships ● Lease 3 steamships to assist with importing goods ● Average 960 containers per ship ● 14-day transit from Asia to US/Canada West Coast ● 10 round trips per year per ship ● 28,850 40’ High cube containers moved annually (est.) Domestic Trucks ● 691 Costco operated trucks ● 80.6 m
Slide 72: Business Centers
Business Centers 22 U.S. Locations 5 Canada Locations - Walk in / delivery for business members - eCommerce fulfillment – Online Dry Grocery
Slide 73: Pharmacy
Pharmacy 49.4MM prescriptions filled globally in FY’21
Slide 74: FY'21 Immunization Program
FY’21 Immunization Program (All Immunizations) FY’21 Covid 872K Influenza 1.1MM Shingrix 182K Total Immunizations 2.2MM
Slide 75: Pharmacy App
Pharmacy App • Schedule flu shots, Covid Vaccine appointments and other Health Clinics. • View list of medications for self, family members, and pets • Request refills on prescriptions. • Check on status of prescriptions. • Transfer Rx - Simple way to transfer your prescription from another pharmacy
Slide 76: Optical
Optical 7.9MM pairs of glasses sold globally in FY’21
Slide 77: Hearing Aid
Hearing Aid 656K units sold globally in FY’21
Slide 78: Food Court
Food Court 122MM hot dog & soda combos sold globally in FY’21
Slide 79: Gasoline
Gasoline Global fuel sales $17.6B in FY’21
Slide 80: Tire Center
Tire Center 8.9MM tires sold globally in FY’21
Slide 81: Financial Position
Financial Position (MM’s) Q1, FY’22 Cash, Equiv, & Short-Term Inv. $13,476 Property & Equipment (net) $23,887 Long-Term & Short-Term Debt $7,466 Stockholders’ Equity $18,463
Slide 82: Dividends
Dividends • Initiated May 2004 at $0.40 per year • Currently at $3.16 per year • Growth Rate 13% per year • $1.4B annually • Four special dividends in the last nine years
Slide 83: Stock Repurchase
Stock Repurchase as of Fiscal Year End 2021 • Program inception – Fiscal Year 2005 • $9.7B total expenditure • 132.6 million shares retired • $73.12 average cost per share • $495MM in FY’21 (avg $364.39/share)
Slide 84: Expansion
Expansion New (net) FY’18 21 FY’19 20 FY’20 13 FY’21 20 FY’22(E) 27
Slide 85: Sustainability Commitment
Sustainability Commitment Updated December 2021
Slide 86: Sustainability Commitment
Sustainability Commitment Four pillars: – Taking care of our employees – Supporting the communities where we operate – Operating efficiently and in an environmentally responsible manner – Strategically sourcing merchandise in a sustainable manner
Slide 87: Sustainability Commitment: Employees
Sustainability Commitment Employees • 288,000 employees worldwide • Premium benefits paid • Industry leading compensation – $23.56/hr average hourly wage in U.S. – $30.08/hr for 10 year service clerk in U.S. • Benefits for full-time and part-time employees – 87% eligible in the U.S.; 97% of eligible
Slide 88: Sustainability Commitment: Diversity, Equity & Inclusion
Sustainability Commitment Diversity, Equity & Inclusion • We strive to have a diverse workforce that is representative of the communities where we do business • We are committed to continuous improvement
Slide 89: Sustainability Commitment: Communities
Sustainability Commitment Communities • 1% of pretax profit donated, over $58MM in 2021: United Way, Red Cross, Children’s Hospitals • Black Economic Development Fund - $25MM investment • Feeding America – 70 million pounds of food and other products donated • World Vision - $137MM in merchandise do
Slide 90: Sustainability Commitment: Operations
Sustainability Commitment Operations • Remain efficient, low-cost operators – Reduce energy, water, waste and emissions – Adopted Climate Action Plan to reduce Carbon Footprint (2021-2024) • Met all of our milestones for 2021
Slide 91: Sustainability Commitment: Merchandise
Sustainability Commitment Merchandise • Ensure supply of high quality merchandise at competitive prices – Respect human rights around the world – Robust animal welfare/fisheries – Kirkland Signature products & programs, includes 100% Roundtable on Sustainable Palm Oil (RSPO) certified palm oil as of
Slide 92: Sustainability Commitment: Packaging
Sustainability Commitment Packaging • Reduce packaging – additional 17 million pounds of plastic reduced in 2021 • Increase recycled content • Increase recyclability & compostability • Educate employees, suppliers, members • Kirkland Signature packaging “How2Recycle” so members know what to do
Slide 93: Company Annual Growth
Company Annual Growth (Since Dec ’85) Net Sales 12.3% Net Income 13.3% Stock Price 17.3% S & P 500 9.3%
Slide 94: Annual Meeting of Shareholders
Annual Meeting of Shareholders January 20, 2022
Costco Wholesale — Shareholder Meeting (January 2022) on 6ix