COSTCO WHOLESALE CORP /NEW (COST)

How they make money

We operate membership warehouses and e-commerce sites based on the concept that offering 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 ⓘ

Revenue mix

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Economics & cash

Revenue $275.24B. Gross margin 6.0%. Operating margin 3.8%. FCF (OCF−capex) $7.84B. lar 2 did not have a material impact on our consolidated financial statements. LIQUIDITY AND CAPITAL RESOURCES The following table summarizes our significant sources and uses of cash and cash equivalents: 202520242023 Net cash provided by operating activities$13,335 $11,339 $11,068 Net cash used in investing activities(5,311)(4,409)(4,972) Net cash used in financing activities(3,775)(10,764)(2,614ⓘ

Balance sheet & capital allocation

Cash & equivalents $14.16B; long-term debt (XBRL concept) $7.53B; goodwill $994.0M; SBC $860.0M; diluted/basic shares signal 443.2M shares. 000 1,962 Total fourth quarter285,000 $983.13 285,000 _______________ (1)Our share repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in January 2023, which expires in January 2027. Performance Graph The following graph compares the cumulative total shareholder return assuming reinvestment of dividends on an investment of $100 in Cosⓘ

Quality & fragility

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What management is saying

ts that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future. 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 performancⓘ

Risks that aren’t boilerplate

D AUGUST 31, 2025 TABLE OF CONTENTS Page PART I Item 1.Business 3 Item 1A.Risk Factors 9 Item 1B.Unresolved Staff Comments 18 Item 1C.Cybersecurity 18 Item 2.Properties 20 Item 3.Legal Proceedings 20 Item 4.Mine Safet…ⓘ

siness 3 Item 1A.Risk Factors 9 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 C…ⓘ

vestments and acquisitions to improve the speed, accuracy and efficiency of our supply chains and delivery channels. The effectiveness of these investments can be less predictable than opening new locations and might …ⓘ

us to incur substantial additional costs, and become subject to litigation and regulatory action. Increased security threats and more sophisticated cyber misconduct pose a risk to our systems, networks, products and s…ⓘ

and certain of our Other International locations have multiple competing clubs. Intellectual Property We believe that, to varying degrees, our trademarks, trade names, copyrights, proprietary processes, trade secrets,…ⓘ

Open questions

1. Which mix shift (segment / geo / product) actually drove the latest year — and is it durable?
2. How much of FCF is structural vs working-capital / one-time timing?
3. What does capital allocation imply for per-share value after SBC and M&A?
4. Which risk in the filing would change the thesis if it worsened for 2–3 years?