1、FISCAL YEAR ENDED SEPTEMBER 3,2023ANNUAL REPORT2023December 7,2023Dear Costco Shareholders,Forty years ago this past September,the first Costco warehouse opened in Seattle.We grew to nearly threebillion dollars in sales in less than six years.Our operating philosophy then and now remains simple:prov

2、ide ourmembers quality merchandise and services at the lowest possible prices.We achieve this through ourcommitment to carrying out our mission statement and adhering to our code of ethics.The successes and challenges we faced in fiscal year 2023 reinforced the foundational business model of Costco,

3、focusing on the most productive items and bringing quality goods to market in volume.Although we experiencedinflationary pressures and general economic uncertainties,our buying and operations staff ensured that qualityand value remained priorities.Net sales for the 53-week year totaled$237.7 billion

4、,an increase of 7%,with a comparable sales increase of 3%.Net income was$6.3 billion,or$14.16 per diluted share,an increase of 8%.Revenue from membership feesincreased 8%to$4.6 billion,and our membership base grew to nearly 128 million cardholders,with a 90%renewal rate.In fiscal year 2023,Costcos e

5、xpansion included opening 23 net new locations:13 in the U.S.,three in China,twoeach in Japan and Australia and one in South Korea,in addition to our first warehouses in New Zealand(Auckland)and Sweden(Stockholm).This year we introduced new Kirkland Signature items,which illustrate our commitment to

6、 provide cost savingsand improve quality.Our new bakery items included a peanut-butter chocolate pie,a lemon blueberry loaf,and alemon meringue cheesecake;each was met with tremendous enthusiasm.Other new KS items included cat food,garlic butter shrimp,barbecue grills and yellow golf balls,each show

7、ing significant savings over comparable brandname products.Our ecommerce business provides a broader selection of merchandise that complements our warehouses.Thisincludes appliances,home furnishings,consumer electronics,lawn and garden,health and beauty aids,apparel,and 2-Day Grocery Delivery.Costco

8、 Next,a Costco marketplace that offers an additional selection of products,has over 60 suppliers and continues to grow.We are dedicated more than ever to operate in a sustainable manner.Our merchandise teams concentrated ondecreasing packaging and plastic use,utilizing post-consumer recycled content

9、,and finding ways to increase sellunits on pallets,trucks and containers,which maximizes space and therefore reduces emissions and costs.Wealso continue to focus on diversity through inclusion,employee development,community involvement andsupplier diversity.Embracing differences is important to the

10、growth of our company,as it leads to opportunities,innovation and employee satisfaction.The coming months will see changes at the executive level.After nearly two years as Costcos President andCOO,Ron Vachris will transition to the role of CEO,with Craig Jelinek retiring from the CEO role after serv

11、ing inthat capacity for more than twelve years.As has been the case since Ron became President and COO,we expecta smooth and seamless transition,maintaining the culture and operational excellence that Costco has beenknown for throughout many years.As this letter was being finalized,we were saddened

12、to learn that Charlie Munger had peacefully passed away,just five weeks shy of his hundredth birthday.Charlie was a long-time fan of Costco,serving on our Board formore than 26 years.No one loved Costco more than Charlie and our company benefited greatly from his wisdom,his business acumen,his passi

13、on for our business,his strong moral ethos and his common sense.We will missCharlie dearly and will take with us the many fond memories that he bestowed on us,personally,and on ourcompany.We extend our deepest gratitude and compliments to our more than 316,000 employees.Their exemplary serviceto our

14、 members,dedication to maintaining our core values and culture,and support of one another is why ouremployees are our greatest competitive advantage.Finally,we would like to thank Costco members around the world.Thank you for your loyal support and trust inCostco.May the year ahead bring you and you

15、r families good health,happiness,peace and prosperity.Sincerely,Craig JelinekRon VachrisChief Executive OfficerPresident&COOCanadaPuerto RicoUnited States andMxico10860040UNITEDSTATESCOSTCO.COMALABAMA4ALASKA4ARIZONA20ARKANSAS1CALIFORNIA135COLORADO16CONNECTICUT8DELAWARE1FLORIDA31GEORGIA17HAWAII7IDAHO

16、7ILLINOIS23INDIANA9IOWA4KANSAS3KENTUCKY4LOUISIANA3MAINE1MARYLAND11MASSACHUSETTS6MICHIGAN16MINNESOTA13MISSISSIPPI1MISSOURI9MONTANA5NEBRASKA3NEVADA8NEWHAMPSHIRE1NEWJERSEY21NEWMEXICO3NEWYORK19NORTHCAROLINA10NORTHDAKOTA2OHIO13OKLAHOMA4OREGON13PENNSYLVANIA11SOUTHCAROLINA6SOUTHDAKOTA1TENNESSEE7TEXAS38UTAH

17、14VERMONT1VIRGINIA17WASHINGTON33WISCONSIN11WASHINGTON,D.C.1PUERTORICO4871 locations as of December 31,2023CANADACOSTCO.CAALBERTA19BRITISHCOLUMBIA14MANITOBA3NEWBRUNSWICK3NEWFOUNDLANDANDLABRADOR1NOVASCOTIA2ONTARIO40QUBEC23SASKATCHEWAN3MXICOCOSTCO.COM.MXAGUASCALIENTES1BAJACALIFORNIA4BAJACALIFORNIASUR1C

18、HIHUAHUA2CIUDADDEMXICO5COAHUILA1GUANAJUATO3JALISCO3MXICO5MICHOACN1MORELOS1NUEVOLEN3PUEBLA1QUERTARO1QUINTANAROO1SANLUISPOTOS1SINALOA1SONORA1TABASCO1VERACRUZ2YUCATN1AustraliaChinaSpainFranceIcelandUnitedKingdom4212915Sweden15NewZealand1TaiwanJapanKorea141833COR000296 1623AUSTRALIACOSTCO.COM.AUAUSTRALI

19、ANCAPITALTERRITORY1NEWSOUTHWALES4QUEENSLAND3SOUTHAUSTRALIA1VICTORIA4WESTERNAUSTRALIA2NEW ZEALANDAUCKLAND1SHANGHAI1JAPANCOSTCO.CO.JPAICHI2CHIBA3FUKUOKA2GIFU1GUNMA2HIROSHIMA1HOKKAIDO2HYOGO2IBARAKI2ISHIKAWA1KANAGAWA3KUMAMOTO1KYOTO1MIYAGI1OSAKA2SAITAMA2SHIZUOKA1TOCHIGI-1TOKYO1TOYAMA1YAMAGATA1SWEDENSTOCK

20、HOLM1KOREACOSTCO.CO.KRBUSAN1CHEONAN1DAEGU2DAEJEON1GIMHAE1GYEONGGI-DO5INCHEON1SEJONG1SEOUL4ULSAN1CHINASHANGHAI2JIANGSU1ZHEJIANG2TAIWANCOSTCO.COM.TWCHIAYICITY1HSINCHUCITY1KAOHSIUNGCITY2NEWTAIPEICITY3TAICHUNGCITY2TAINANCITY1TAIPEICITY2TAOYUANCITY2UNITEDKINGDOMCOSTCO.CO.UKENGLAND25SCOTLAND3WALES1ICELAND

21、KAUPTN1SPAINANDALUCA1BISCAY1MADRID2MADRID2FRANCELE-DE-FRANCE2UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended September 3,2023orTRANSITION REPORT PURSUANT TO SECTION

22、 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934Commission file number 0-20355Costco Wholesale Corporation(Exact name of registrant as specified in its charter)Washington91-1223280(State or other jurisdiction ofincorporation or organization)(I.R.S.Employer Identification No.)999 Lake Drive,Issaquah

23、,WA 98027(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(425)313-8100Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of each exchange onwhich registeredCommon Stock,$.005 Par ValueCOSTThe NASDAQ Globa

24、l Select MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of theSecurities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 orS

25、ection 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter periodthat the registrant was required to file such reports),and(2)h

26、as been subject to such filing requirementsfor the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data Filerequired to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during thepreceding 12 months(or for su

27、ch shorter period that the registrant was required to submit such files).YesNo Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated fi

28、ler,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has

29、 elected not to use theextended transition period for complying with any new or revised financial accounting standards providedpursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managementsassessment of the effectiv

30、eness of its internal control over financial reporting under Section 404(b)of theSarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issuedits audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether thefina

31、ncial statements of the registrant included in the filing reflect the correction of an error to previouslyissued financials statements.Indicate by check mark whether any of those error corrections are restatements that required a recoveryanalysis of incentive-based compensation received by any of th

32、e registrants executive officers during therelevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of the voting stock held by non-affiliates of the registrant as of Febr

33、uary 12,2023 was$221,351,787,419.The number of shares outstanding of the registrants common stock as of October 3,2023,was442,740,572.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Companys Proxy Statement for the Annual Meeting of Shareholders to be held onJanuary 18,2024,are incorporated by re

34、ference into Part III of this Form 10-K.COSTCO WHOLESALE CORPORATIONANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 3,2023TABLE OF CONTENTSPagePART IItem 1.Business.4Item 1A.Risk Factors.9Item 1B.Unresolved Staff Comments.18Item 2.Properties.19Item 3.Legal Proceedings.19Item 4.Mine Sa

35、fety Disclosures.19PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and IssuerPurchases of Equity Securities.19Item 6.Reserved.20Item 7.Managements Discussion and Analysis of Financial Condition and Results ofOperations.21Item 7A.Quantitative and Qualitative Disclosures

36、 About Market Risk.29Item 8.Financial Statements and Supplementary Data.31Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure.61Item 9A.Controls and Procedures.61Item 9B.Other Information.62Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspect

37、ions.62PART IIIItem 10.Directors,Executive Officers and Corporate Governance.62Item 11.Executive Compensation.62Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters.62Item 13.Certain Relationships and Related Transactions,and Director Independence.62I

38、tem 14.Principal Accounting Fees and Services.62PART IVItem 15.Exhibits,Financial Statement Schedules.63Item 16.Form 10-K Summary.66Signatures.673INFORMATION RELATING TO FORWARD LOOKING STATEMENTSCertain statements contained in this document constitute forward-looking statements within the meaningof

39、 the Private Securities Litigation Reform Act of 1995.For these purposes,forward-looking statementsare statements that address activities,events,conditions or developments that the Company expects oranticipates may occur in the future and may relate to such matters as net sales growth,changes incomp

40、arable sales,cannibalization of existing locations by new openings,price or fee changes,earningsperformance,earnings per share,stock-based compensation expense,warehouse openings andclosures,capital spending,the effect of adopting certain accounting standards,future financial reporting,financing,mar

41、gins,return on invested capital,strategic direction,expense controls,membership renewalrates,shopping frequency,litigation,and the demand for our products and services.In some cases,forward-looking statements can be identified because they contain words such as“anticipate,”“believe,”“continue,”“coul

42、d,”“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,orperform

43、ance to differ materially from those indicated by such statements,including,without limitation,thefactors set forth in the section titled“Item 1A-Risk Factors”,and other factors noted in the section titled“Item 7-Managements Discussion and Analysis of Financial Condition and Results of Operations”an

44、d inthe consolidated financial statements and related notes in Item 8 of this Report.Forward-lookingstatements speak only as of the date they are made,and we do not undertake to update thesestatements,except as required by law.PART IItem 1BusinessCostco Wholesale Corporation and its subsidiaries(Cos

45、tco or the Company)began operations in 1983,inSeattle,Washington.We are principally engaged in the operation of membership warehouses in theUnited States(U.S.)and Puerto Rico,Canada,Mexico,Japan,the United Kingdom(U.K.),Korea,Australia,Taiwan,China,Spain,France,Iceland,New Zealand,and Sweden.Costco

46、operated 861,838,and 815 warehouses worldwide at September 3,2023,August 28,2022,and August 29,2021.TheCompany operates e-commerce websites in the U.S.,Canada,Mexico,the U.K.,Korea,Taiwan,Japan,and Australia.Our common stock trades on the NASDAQ Global Select Market,under the symbol“COST.”We report

47、on a 52/53-week fiscal year,consisting of thirteen four-week periods and ending on the Sundaynearest the end of August.The first three quarters consist of three periods each,and the fourth quarterconsists of four periods(five weeks in the thirteenth period in a 53-week year).The material seasonalimp

48、act in our operations is increased net sales and earnings during the winter holiday season.References to 2023 relate to the 53-week fiscal year ended September 3,2023.References to 2022 and2021 relate to the 52-week fiscal years ended August 28,2022,and August 29,2021.GeneralWe operate membership wa

49、rehouses and e-commerce websites based on the concept that offering ourmembers low prices on a limited selection of nationally-branded and private-label products in a widerange of categories will produce high sales volumes and rapid inventory turnover.When combined withthe operating efficiencies ach

50、ieved by volume purchasing,efficient distribution and reduced handling ofmerchandise in no-frills,self-service warehouse facilities,these volumes and turnover enable us tooperate profitably at significantly lower gross margins(net sales less merchandise costs)than most otherretailers.We often sell i

51、nventory before we are required to pay for it,even while taking advantage of earlypayment discounts.4We buy most of our merchandise directly from suppliers and route it to cross-docking consolidation points(depots)or directly to our warehouses.Our depots receive large shipments from suppliers and qu

52、icklyship these goods to warehouses.This process creates freight volume and handling efficiencies,loweringcosts associated with traditional multiple-step distribution channels.Our e-commerce operations shipmerchandise through our depots and logistics operations,as well as through drop-ship and other

53、 deliveryarrangements with our suppliers.Our average warehouse space is approximately 147,000 square feet,with newer units being slightlylarger.Floor plans are designed for economy and efficiency in the use of selling space,the handling ofmerchandise,and the control of inventory.Because shoppers are

54、 attracted principally by the quality ofmerchandise and low prices,our warehouses are not elaborate.By strictly controlling the entrances andexits and using a membership format,we believe our inventory losses(shrinkage)are well below those oftypical retail operations.Our warehouses on average operat

55、e on a seven-day,70-hour week.Gasoline operations generally haveextended hours.Because the hours of operation are shorter than many other retailers,and due to otherefficiencies inherent in a warehouse-type operation,labor costs are lower relative to the volume of sales.Merchandise is generally store

56、d on racks above the sales floor and displayed on pallets containing largequantities,reducing labor required.In general,with variations by country,our warehouses accept certaincredit cards,including Costco co-branded cards,debit cards,cash and checks,Executive member 2%reward certificates,co-brand c

57、ardholder rebates,and our proprietary stored-value card(shop card).Our strategy is to provide our members with a broad range of high-quality merchandise at prices webelieve are consistently lower than elsewhere.We seek to limit most items to fast-selling models,sizes,and colors.We carry less than 4,

58、000 active stock keeping units(SKUs)per warehouse in our corewarehouse business,significantly less than other broadline retailers.We average anywhere from 9,000 to11,000 SKUs online,some of which are also available in our warehouses.Many consumable products areoffered for sale in case,carton,or mult

59、iple-pack quantities only.In keeping with our policy of member satisfaction,we generally accept returns of merchandise.On certainelectronic items,we typically have a 90-day return policy and provide,free of charge,technical supportservices,as well as an extended warranty.Additional third-party warra

60、nty coverage is sold on certainelectronic items.We offer merchandise and services in the following categories:Core Merchandise Categories(or core business):Foods and Sundries(including sundries,dry grocery,candy,cooler,freezer,deli,liquor,andtobacco)Non-Foods(including major appliances,electronics,h

61、ealth and beauty aids,hardware,gardenand patio,sporting goods,tires,toys and seasonal,office supplies,automotive care,postage,tickets,apparel,small appliances,furniture,domestics,housewares,special order kiosk,andjewelry)Fresh Foods(including meat,produce,service deli,and bakery)Warehouse Ancillary(

62、includes gasoline,pharmacy,optical,food court,hearing aids,and tire installation)and Other Businesses(includes e-commerce1,business centers1,travel,and other)Warehouse ancillary businesses operate primarily within or next to our warehouses,encouragingmembers to shop more frequently.The number of war

63、ehouses with gas stations varies significantly bycountry,and we have no gasoline business in Korea,China,or Sweden.We operated 692 gas stations atthe end of 2023.Our gasoline business represented approximately 13%of total net sales in 2023.51E-commerce and business centers are allocated to the appro

64、priate merchandise categories in the Net Sales portion of Item 7.Our other businesses sell products and services that complement our warehouse operations(core andwarehouse ancillary businesses).Our e-commerce operations give members convenience and a broaderselection of goods and services.Net sales

65、for e-commerce represented approximately 6%of total netsales in 2023.This figure does not include other services we offer online in certain countries such asbusiness delivery,travel,same-day grocery,and various other services.Our business centers carry itemstailored specifically for food services,co

66、nvenience stores and offices,and offer walk-in shopping anddeliveries.Business centers are included in our total warehouse count.Costco Travel offers vacationpackages,car rentals,cruises,hotels,and other travel products exclusively for Costco members(offeredin the U.S.,Canada,and the U.K.).We have d

67、irect buying relationships with many producers of brand-name merchandise.We do not obtaina significant portion of merchandise from any one supplier.When sources of supply become unavailable,we seek alternatives.We also purchase and manufacture private-label merchandise,as long as qualityand member d

68、emand are high and the value to our members is significant.Certain financial information for our segments and geographic areas is included in Note 11 to theconsolidated financial statements included in Item 8 of this Report.MembershipOur members may utilize their memberships at all of our warehouses

69、 and websites.Gold Starmemberships are available to individuals;Business memberships are limited to businesses,includingindividuals with a business license,retail sales license,or comparable document.Business members mayadd additional cardholders(affiliates),to which the same annual fee applies.Affi

70、liates are not available forGold Star members.Our annual fee for these memberships is$60 in the U.S.and varies in othercountries.All paid memberships include a free household card.Our member renewal rate was 92.7%in the U.S.and Canada and 90.4%worldwide at the end of 2023.The majority of members ren

71、ew within six months following their renewal date.Our renewal rate,whichexcludes affiliates of Business members,is a trailing calculation that captures renewals during the periodseven to eighteen months prior to the reporting date.Our membership counts include active membershipsas well as membership

72、s that have not renewed within the 12 months prior to the reporting date.Our membership was made up of the following(in thousands):202320222021Gold Star.58,80054,00050,200Business,including affiliates.12,20011,80011,500Total paid members.71,00065,80061,700Household cards.56,90053,10049,900Total card

73、holders.127,900118,900111,600Paid cardholders(except affiliates)are eligible to upgrade to an Executive membership in the U.S.,for anadditional annual fee of$60.Executive memberships are also available in Canada,Mexico,the U.K.,Japan,Korea,Taiwan,and Australia,for which the additional fee varies.Exe

74、cutive members earn a 2%reward on qualified purchases(generally up to a maximum reward of$1,000 per year),redeemable atCostco warehouses.This program offers services that vary by state and country and provide access toadditional savings and benefits on various business and consumer services,such as

75、auto and homeinsurance,the Costco auto purchase program,and check printing.Executive members totaled 32.3million and represented 45.4%of paid members.The sales penetration of Executive membersrepresented approximately 72.8%of worldwide net sales in 2023.6Human CapitalOur Code of Ethics requires that

76、 we“Take Care of Our Employees,”which is fundamental to theobligation to“Take Care of Our Members.”We must also carefully control our selling,general andadministrative(SG&A)expenses,so that we can sell high quality goods and services at low prices.Compensation and benefits for employees is our large

77、st expense after the cost of merchandise and iscarefully monitored.Employee BaseAt the end of 2023,we employed 316,000 employees worldwide.Approximately 95%are employed in ourmembership warehouses and distribution channels,and approximately 5%are represented by unions.We also utilize seasonal employ

78、ees.The total number of employees by segment was:202320222021United States.208,000202,000192,000Canada.51,00050,00047,000Other International.57,00052,00049,000Total employees.316,000304,000288,000Growth and EngagementWe believe that our warehouses are among the most productive in the retail industry

79、,owing largely to thecommitment and efficiency of our employees.We seek to provide them not merely with employment butcareers.Many attributes of our business contribute to the objective.The more significant include:competitive compensation and benefits for those working in our membership warehouses

80、anddistributions channels;a commitment to promoting from within;and a target ratio of at least 50%of ouremployee base being full-time employees.These attributes contribute to what we consider,especially forthe industry,a high retention rate.In 2023,in the U.S.that rate was approximately 90%for emplo

81、yeeswho have been with us for at least one year.Diversity,Equity and InclusionThe commitment to“Take Care of Our Employees”is also the foundation of our approach to promotingdiversity,equity and inclusion and creating an inclusive and respectful workplace.We strive for anenvironment where all employ

82、ees feel that they belong,are accepted,included,respected and supportedbecause of who they are.We demonstrate leadership commitment to equity through consistentcommunication,employee development and education,support of diversity and inclusion initiatives withinthe organization,community involvement

83、,and supplier diversity.Costco continues its efforts to developfuture leaders,including through the supervisor in training programs.In 2023,over 7,800 hourlyemployees completed the 6-week course.Well BeingCostco strives to provide our employees with competitive wages and excellent benefits.In March

84、2023,we increased the top of the wage scales by 85 cents per hour in the U.S,Canada and Puerto Rico.InSeptember of 2023,we increased the starting wage to at least$18.50 for all entry-level positions in theU.S.We have also expanded our benefits in the U.S.to include additional mental health support f

85、orchildren and adults at little to no cost to our employees.Costco is firmly committed to protecting the healthand safety of our members and employees and to serving our communities.7For more detailed information regarding our programs and initiatives,see“Employees”within ourSustainability Commitmen

86、t(located on our website).The Sustainability Commitment and otherinformation on our website are not incorporated by reference into and do not form any part of this AnnualReport.CompetitionOur industry is highly competitive,based on factors such as price,merchandise quality and selection,location,con

87、venience,distribution strategy,and customer service.We compete on a worldwide basis withglobal,national,and regional wholesalers and retailers,including supermarkets,supercenters,onlineretailers,gasoline stations,hard discounters,department and specialty stores,and operators selling asingle category

88、 or narrow range of merchandise.Walmart,Target,Kroger,and Amazon are among oursignificant general merchandise retail competitors in the U.S.We also compete with other warehouseclubs,including Walmarts Sams Club and BJs Wholesale Club in the U.S.Many of the majormetropolitan areas in the U.S.and cert

89、ain of our Other International locations have multiple competingclubs.Intellectual PropertyWe believe that,to varying degrees,our trademarks,trade names,copyrights,proprietary processes,trade secrets,trade dress,domain names and similar intellectual property add significant value to ourbusiness and

90、are important to our success.We have invested significantly in the development andprotection of our well-recognized brands,including the Costco Wholesale trademarks and our private-label brand,Kirkland Signature.We believe that Kirkland Signature products are high quality,offered atprices that are g

91、enerally lower than national brands,and help lower costs,differentiate our merchandiseofferings,and generally earn higher margins.We expect to continue to increase the sales penetration ofour private-label items.We rely on trademark and copyright laws,trade-secret protection,and confidentiality,lice

92、nse and otheragreements with our suppliers,employees and others to protect our intellectual property.The availabilityand duration of trademark registrations vary by country;however,trademarks are generally valid and maybe renewed indefinitely as long as they are in use and registrations are maintain

93、ed.Available InformationOur U.S.website is .We make available through the Investor Relations section of thatsite,free of charge,our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reportson Form 8-K,Proxy Statements and Forms 3,4 and 5,and any amendments to those reports,as soon a

94、sreasonably practicable after filing such materials with or furnishing such documents to the Securities andExchange Commission(SEC).The information found on our website is not part of this or any other reportfiled with or furnished to the SEC.The SEC maintains a site that contains reports,proxy and

95、informationstatements,and other information regarding issuers,such as the Company,that file electronically with theSEC at www.sec.gov.We have a code of ethics for senior financial officers,pursuant to Section 406 of the Sarbanes-Oxley Act.Copies of the code are available free of charge by writing to

96、 Secretary,Costco Wholesale Corporation,999 Lake Drive,Issaquah,WA 98027.If the Company makes any amendments to this code(other thantechnical,administrative,or non-substantive amendments)or grants any waivers,including implicitwaivers,to the Chief Executive Officer,Chief Financial Officer or princip

97、al accounting officer andcontroller,we will disclose(on our website or in a Form 8-K report filed with the SEC)the nature of theamendment or waiver,its effective date,and to whom it applies.8Information about our Executive OfficersThe executive officers of Costco,their position,and ages are listed b

98、elow.All have over 25 years ofservice with the Company,with the exception of Mr.Sullivan who has 22 years of service.NamePositionExecutiveOfficerSinceAgeW.Craig Jelinek.Chief Executive Officer.Mr.Jelinek has been a director sinceFebruary 2010.Mr.Jelinek previously was President and CEO fromJanuary 2

99、012 to February 2022.He was President and ChiefOperating Officer from February 2010 to December 2011.Prior tothat he was Executive Vice President,Chief Operating Officer,Merchandising since 2004.199571Ron M.Vachris.President and Chief Operating Officer.Mr.Vachris has been adirector since February 20

100、22.Mr.Vachris previously served asExecutive Vice President of Merchandising from June 2016 toJanuary 2022,as Senior Vice President,Real Estate Development,from August 2015 to June 2016,and Senior Vice President,GeneralManager,Northwest Region,from 2010 to July 2015.201658Richard A.Galanti.Executive

101、Vice President and Chief Financial Officer.Mr.Galantihas been a director since January 1995.199367Jim C.Klauer.ExecutiveVicePresident,ChiefOperatingOfficer,NorthernDivision.Mr.Klauer was Senior Vice President,Non-Foods and E-commerce Merchandise,from 2013 to January 2018.201861Russ D.Miller.Senior E

102、xecutive Vice President,U.S.Operations.Mr.Miller wasExecutiveVicePresident,ChiefOperatingOfficer,SouthwestDivision and Mexico,from January 2018 to May 2022.Mr.Millerwas Senior Vice President,Western Canada Region,from 2001 toJanuary 2018.201866Patrick J.Callans.Executive Vice President,Administratio

103、n.Mr.Callans was SeniorVice President,Human Resources and Risk Management,from2013 to December 2018.201961Yoram B.Rubanenko.Executive Vice President,Chief Operating Officer,Eastern Division.Mr.Rubanenko was Senior Vice President and General Manager,Southeast Region,from 2013 to September 2021,and Vi

104、cePresident,Regional Operations Manager for the Northeast Region,from 1998 to 2013.202159John Sullivan.Executive Vice President,General Counsel&Corporate Secretary.Mr.Sullivan has been General Counsel since 2016 and CorporateSecretary since 2010.202163Claudine E.Adamo.Executive Vice President,Mercha

105、ndising.Ms.Adamo was SeniorVice President,Non-Foods,from 2018 to February 2022,and VicePresident,Non-Foods,from 2013 to 2018.202253Caton Frates.ExecutiveVicePresident,ChiefOperatingOfficer,SouthwestDivision.Mr.Frates was Senior Vice President,Los AngelesRegion,from 2015 to May 2022.202255Pierre Riel

106、.Executive Vice President,Chief Operating Officer,InternationalDivision.Mr.Riel was Senior Vice President,Country Manager,Canada,from 2019 to March 2022,and Senior Vice President,Eastern Canada Region,from 2001 to 2019.202260Item 1ARisk FactorsThe risks described below could materially and adversely

107、 affect our business,financial condition andresults of operations.We could also be affected by additional risks that apply to all companies operatingin the U.S.and globally,as well as other risks that are not presently known to us or that we currentlyconsider to be immaterial.These Risk Factors shou

108、ld be carefully reviewed in conjunction withManagements Discussion and Analysis of Financial Condition and Results of Operations in Item 7 andour consolidated financial statements and related notes in Item 8 of this Report.9Business and Operating RisksWe are highly dependent on the financial perform

109、ance of our U.S.and Canadian operations.Our financial and operational performance is highly dependent on our U.S.and Canadian operations,which comprised 87%and 84%of net sales and operating income in 2023.Within the U.S.,we are highlydependent on our California operations,which comprised 27%of U.S.n

110、et sales in 2023.Our Californiamarket,in general,has a larger percentage of higher volume warehouses as compared to our otherdomestic markets.Any substantial slowing or sustained decline in these operations could materiallyadversely affect our business and financial results.Declines in financial per

111、formance of our U.S.operations,particularly in California,and our Canadian operations could arise from,among other things:slow growth or declines in comparable warehouse sales(comparable sales);negative trends in operatingexpenses,including increased labor,healthcare and energy costs;failing to meet

112、 targets for warehouseopenings;cannibalizing existing locations with new warehouses;shifts in sales mix toward lower grossmargin products;changes or uncertainties in economic conditions in our markets,including higher levelsof unemployment and depressed home values;and failing to consistently provid

113、e high quality andinnovative new products.We may be unsuccessful implementing our growth strategy,including expanding our business inexisting markets and new markets,and integrating acquisitions,which could have an adverseimpact on our business,financial condition and results of operations.Our growt

114、h is dependent,in part,on our ability to acquire property and build or lease new warehousesand depots.We compete with other retailers and businesses for suitable locations.Local land use andother regulations restricting the construction and operation of our warehouses and depots,as well as localcomm

115、unity actions opposed to the location of our warehouses or depots at specific sites and the adoptionof local laws restricting our operations and environmental regulations,may impact our ability to findsuitable locations and increase the cost of sites and of constructing,leasing and operating warehou

116、sesand depots.We also may have difficulty negotiating leases or purchase agreements on acceptable terms.In addition,certain jurisdictions have enacted or proposed laws and regulations that would prevent orrestrict the operation or expansion plans of certain large retailers and warehouse clubs,includ

117、ing us.Failure to effectively manage these and other similar factors may affect our ability to timely build or leaseand operate new warehouses and depots,which could have a material adverse effect on our futuregrowth and profitability.We seek to expand in existing markets to attain a greater overall

118、 market share.A new warehouse maydraw members away from our existing warehouses and adversely affect their comparable salesperformance,member traffic,and profitability.We intend to continue to open warehouses in new markets.Associated risks include difficulties inattracting members due to a lack of

119、familiarity with us,attracting members of other wholesale cluboperators,our lesser familiarity with local member preferences,and seasonal differences in the market.Entry into new markets may bring us into competition with new competitors or with existing competitorswith a large,established market pr

120、esence.We cannot ensure that new warehouses and new e-commercewebsites will be profitable and future profitability could be delayed or otherwise materially adverselyaffected.We have made and may continue to make investments and acquisitions to improve the speed,accuracyand efficiency of our supply c

121、hains and delivery channels.The effectiveness of these investments can beless predictable than opening new locations and might not provide the anticipated benefits or desiredrates of return.10Our failure to maintain membership growth,loyalty and brand recognition could adversely affectour results of

122、 operations.Membership loyalty and growth are essential to our business.The extent to which we achieve growth inour membership base,increase the penetration of Executive membership,and sustain high renewal ratesmaterially influences our profitability.Damage to our brands or reputation may negatively

123、 impactcomparable sales,diminish member trust,and reduce renewal rates and,accordingly,net sales andmembership fee revenue,negatively impacting our results of operations.We sell many products under our Kirkland Signature brand.Maintaining consistent product quality,competitive pricing,and availabili

124、ty of these products is essential to developing and maintaining memberloyalty.These products also generally carry higher margins than national brand products and represent agrowing portion of our overall sales.If the Kirkland Signature brand experiences a loss of memberacceptance or confidence,our s

125、ales and gross margin results could be adversely affected.Disruptions in merchandise distribution or processing,packaging,manufacturing,and otherfacilities could adversely affect sales and member satisfaction.We depend on the orderly operation of the merchandise receiving and distribution process,pr

126、imarilythrough our depots.We also rely upon processing,packaging,manufacturing and other facilities tosupport our business,which includes the production of certain private-label items.Although we believethat our operations are efficient,disruptions due to fires,tornadoes,hurricanes,earthquakes,pande

127、micsor other extreme weather conditions or catastrophic events,labor issues or other shipping problems mayresult in delays in the production and delivery of merchandise to our warehouses,which could adverselyaffect sales and the satisfaction of our members.Our e-commerce operations depend heavily on

128、 third-party and in-house logistics providers and is negatively affected when these providers are unable toprovide services in a timely fashion.We may not timely identify or effectively respond to consumer trends,which could negativelyaffect our relationship with our members,the demand for our produ

129、cts and services,and ourmarket share.It is difficult to consistently and successfully predict the products and services that our members willdesire.Our success depends,in part,on our ability to identify and respond to trends in demographics andconsumer preferences.Failure to identify timely or effec

130、tively respond to changing consumer tastes,preferences(including those relating to environmental,social and governance practices)and spendingpatterns could negatively affect our relationship with our members,the demand for our products andservices,and our market share.If we are not successful at pre

131、dicting our sales trends and adjusting ourpurchases accordingly,we may have excess inventory,which could result in additional markdowns,or wemay experience out-of-stock positions and delivery delays,which could result in higher costs,both ofwhich would reduce our operating performance.This could hav

132、e an adverse effect on net sales,grossmargin and operating income.Availability and performance of our information technology(IT)systems are vital to our business.Failure to successfully execute IT projects and have IT systems available to our business wouldadversely impact our operations.IT systems

133、play a crucial role in conducting our business.These systems are utilized to process a veryhigh volume of transactions,conduct payment transactions,track and value our inventory and producereports critical for making business decisions.Failure or disruption of these systems could have anadverse impa

134、ct on our ability to buy products and services from our suppliers,produce goods in ourmanufacturing plants,move the products in an efficient manner to our warehouses and sell products toour members.We are undertaking large technology and IT transformation projects.The failure of theseprojects could

135、adversely impact our business plans and potentially impair our day to day businessoperations.Given the high volume of transactions we process,it is important that we build strong digitalresiliency to prevent disruption from events such as power outages,computer and telecommunications11failures,virus

136、es,internal or external security breaches,errors by employees,and catastrophic eventssuch as fires,earthquakes,tornadoes and hurricanes.Any debilitating failure of our critical IT systems,data centers and backup systems would require significant investments in resources to restore ITservices and may

137、 cause serious impairment in our business operations including loss of businessservices,increased cost of moving merchandise and failure to provide service to our members.We arecurrently making substantial investments in maintaining and enhancing our digital resiliency and failure ordelay in these p

138、rojects could be costly and harmful to our business.Failure to deliver IT transformationefforts efficiently and effectively could result in the loss of our competitive position and adversely impactour financial condition and results of operations.Insufficient IT capacity could also impact our capaci

139、ty fortimely,complete and accurate financial and non-financial reporting required by law.We are required to maintain the privacy and security of personal and business information amidstmultiplying threat landscapes and in compliance with privacy and data protection regulationsglobally.Failure to do

140、so could damage our business,including our reputation with members,suppliers and employees,cause us to incur substantial additional costs,and become subject tolitigation and regulatory action.Increased security threats and more sophisticated cyber misconduct pose a risk to our systems,networks,produ

141、cts and services.We rely upon IT systems and networks,some of which are managed byor belong to third parties,including suppliers,partners,vendors,and service providers.Additionally,wecollect,store and process sensitive information relating to our business,members,employees,and otherthird parties.Ope

142、rating these IT systems and networks,and processing and maintaining this data,in asecure manner,is critical to our business operations and strategy.Increased remote work has alsoincreased the possible attack surfaces.Attempts to gain unauthorized access to systems,networks anddata,both ours and thir

143、d parties with whom we work,are increasing in frequency and sophistication,andin some cases,these attempts are successful.Cybersecurity attacks may range from random attempts tocoordinated and targeted attacks,including sophisticated computer crimes and advanced persistentthreats.Phishing attacks ha

144、ve emerged as particularly prominent,including as vectors for ransomwareattacks,which have increased in breadth and frequency.While we train our employees as part of oursecurity efforts,that training cannot be completely effective.These threats pose a risk to the security ofour systems and networks

145、and the confidentiality,integrity,and availability of our data.Our IT systemsand networks,or those managed by third parties such as cloud providers or suppliers that otherwise hostor have access to confidential information,periodically have vulnerabilities,which may go unnoticed for aperiod of time.

146、Our logging capabilities,or the logging capabilities of third parties,are also not alwayscomplete or sufficiently detailed,affecting our ability to fully investigate and understand the scope ofsecurity events.While our cybersecurity and compliance efforts seek to mitigate such risks,there can beno g

147、uarantee that the actions and controls we and our third-party service providers have implementedand are implementing,will be sufficient to protect our systems,information or other property.The potential impacts of a cybersecurity attack include reputational damage,litigation,governmentenforcement ac

148、tions,penalties,disruption to systems and operations,unauthorized release of confidentialor otherwise protected information,corruption of data,diminution in the value of our investment in ITsystems and increased cybersecurity protection and remediation costs.This could adversely affect ourcompetitiv

149、eness,results of operations and financial condition and,critically in light of our business model,loss of member confidence.Further,the insurance coverage we maintain and indemnificationarrangements with third parties may be inadequate to cover claims,costs,and liabilities relating tocybersecurity i

150、ncidents.In addition,data we collect,store and process is subject to a variety of U.S.andinternational laws and regulations,such as the European Unions General Data Protection Regulation,California Consumer Privacy Act,Health Insurance Portability and Accountability Act,and other privacyand cybersec

151、urity laws across the various states and around the globe,which may carry significantpotential penalties for noncompliance.12We are subject to payment-related risks.We accept payments using a variety of methods,including select credit and debit cards,cash and checks,co-brand cardholder rebates,Execu

152、tive member 2%reward certificates,and our shop card.As we offernew payment options to our members,we may be subject to additional rules,regulations,compliancerequirements,and higher fraud losses.For certain payment methods,we pay interchange and otherrelated acceptance fees,along with additional tra

153、nsaction processing fees.We rely on third parties toprovide payment transaction processing services for credit and debit cards and our shop card.It coulddisrupt our business if these parties become unwilling or unable to provide these services to us.We arealso subject to fee increases by these servi

154、ce providers.We must comply with evolving payment card association and network operating rules,including datasecurity rules,certification requirements and rules governing electronic funds transfers.For example,weare subject to Payment Card Industry Data Security Standards,which contain compliance gu

155、idelines andstandards with regard to our security surrounding the physical and electronic storage,processing andtransmission of individual cardholder data.If our internal systems are breached or compromised,we maybe liable for card re-issuance costs,subject to fines and higher transaction fees and l

156、ose our ability toaccept card payments from our members,and our business and operating results could be adverselyaffected.Our failure to offer payment methods desired by our members could create a competitivedisadvantage.We might sell products that cause illness or injury to our members,harm to our

157、reputation,andexpose us to litigation.If our merchandise,including food and prepared food products for human consumption,drugs,childrensproducts,pet products and durable goods,do not meet or are perceived not to meet applicable safety orlabeling standards or our members expectations,we could experie

158、nce lost sales,increased costs,litigation or reputational harm.The sale of these items involves the risk of illness or injury to our members.Such illnesses or injuries could result from tampering by unauthorized third parties,product contaminationor spoilage,including the presence of foreign objects

159、,substances,chemicals,other agents,or residuesintroduced during the growing,manufacturing,storage,handling and transportation phases,or faultydesign.Our suppliers are generally contractually required to comply with product safety laws,and we aredependent on them to ensure that the products we buy co

160、mply with safety and other standards.While weare subject to governmental inspection and regulations and work to comply in all material respects withapplicable laws and regulations,we cannot be sure that consumption or use of our products will not causeillness or injury or that we will not be subject

161、 to claims,lawsuits,or government investigations relating tosuch matters,resulting in costly product recalls and other liabilities that could adversely affect ourbusiness and results of operations.Even if a product liability claim is unsuccessful or is not fully pursued,negative publicity could adve

162、rsely affect our reputation with existing and potential members and ourcorporate and brand image,and these effects could be long-term.If we do not successfully develop and maintain a relevant omnichannel experience for ourmembers,our results of operations could be adversely impacted.Omnichannel reta

163、iling is rapidly evolving,and we must keep pace with changing member expectationsand new developments by our competitors.Our members are increasingly using mobile phones,tablets,computers,and other devices to shop and to interact with us through social media.We are makinginvestments in our websites

164、and mobile applications.If we are unable to make,improve,or developrelevant member-facing technology in a timely manner,our ability to compete and our results ofoperations could be adversely affected.Inability to attract,train and retain highly qualified employees could adversely impact ourbusiness,

165、financial condition and results of operations.Our success depends on the continued contributions of our employees,including members of our seniormanagement and other key operations,IT,merchandising and administrative personnel.Failure to identify13and implement a succession plan for senior managemen

166、t could negatively impact our business.We mustattract,train and retain a large and growing number of qualified employees,while controlling related laborcosts and maintaining our core values.Our ability to control labor and benefit costs is subject tonumerous internal and external factors,including r

167、egulatory changes,prevailing wage rates,unionrelations and healthcare and other insurance costs.We compete with other retail and non-retailbusinesses for these employees and invest significant resources in training and motivating them.There isno assurance that we will be able to attract or retain hi

168、ghly qualified employees in the future,which couldhave a material adverse effect on our business,financial condition and results of operations.We may incur property,casualty or other losses not covered by our insurance.Claims for employee health care benefits,workers compensation,general liability,p

169、roperty damage,directors and officers liability,vehicle liability,inventory loss,and other exposures are fundedpredominantly through self-insurance.Insurance coverage is maintained for certain risks to limitexposures arising from very large losses.The types and amounts of insurance may vary from tim

170、e to timebased on our decisions with respect to risk retention and regulatory requirements.Significant claims orevents,regulatory changes,a substantial rise in costs of health care or costs to maintain our insurance orthe failure to maintain adequate insurance coverage could have an adverse impact o

171、n our financialcondition and results of operations.Although we maintain specific coverages for catastrophic property losses,we still bear a significantportion of the risk of losses incurred as a result of any physical damage to,or the destruction of,anywarehouses,depots,manufacturing or home office

172、facilities,loss or spoilage of inventory,and businessinterruption.Such losses could materially impact our cash flows and results of operations.Market and Other External RisksWe face strong competition from other retailers and warehouse club operators,which couldadversely affect our business,financia

173、l condition and results of operations.The retail business is highly competitive.We compete for members,employees,sites,products andservices and in other important respects with a wide range of local,regional and national wholesalers andretailers,both in the United States and in foreign countries,inc

174、luding other warehouse-club operators,supermarkets,supercenters,online retailers,gasoline stations,hard discounters,department andspecialty stores and operators selling a single category or narrow range of merchandise.Such retailersand warehouse club operators compete vigorously and in a variety of

175、ways,including pricing,selectionand availability,services,location,convenience,store hours,and the attractiveness and ease of use ofwebsites and mobile applications.The evolution of retailing in online and mobile channels has improvedthe ability of customers to comparison shop,which has enhanced com

176、petition.Some competitors havegreater financial resources and technology capabilities,better access to merchandise,and greater marketpenetration than we do.Our inability to respond effectively to competitive pressures,changes in the retailmarkets or customer expectations could result in lost market

177、share and negatively affect our financialresults.General economic factors,domestically and internationally,may adversely affect our business,financial condition,and results of operations.Higher energy and gasoline costs,inflation,levels of unemployment,healthcare costs,consumer debtlevels,foreign-cu

178、rrency exchange rates,unsettled financial markets,weaknesses in housing and realestate markets,reduced consumer confidence,changes and uncertainties related to government fiscal,monetary and tax policies including changes in interest rates,tax rates,duties,tariffs,or other restrictions,sovereign deb

179、t crises,pandemics and other health crises,and other economic factors could adverselyaffect demand for our products and services,require a change in product mix,or impact the cost of orability to purchase inventory.Additionally,trade-related actions in various countries,particularly China andthe Uni

180、ted States,have affected the costs of some of our merchandise.The degree of our exposure isdependent on(among other things)the type of goods,rates imposed,and timing of the tariffs.The impact14to our net sales and gross margin is influenced in part by our merchandising and pricing strategies inrespo

181、nse to potential cost increases.Higher tariffs could adversely impact our results.Prices of certain commodities,including gasoline and consumable goods used in manufacturing and ourwarehouse retail operations,are historically volatile and are subject to fluctuations arising from changes indomestic a

182、nd international supply and demand,inflationary pressures,labor costs,competition,marketspeculation,government regulations,taxes and periodic delays in delivery.Rapid and significant changesin commodity prices and our ability and desire to pass them through to our members may affect our salesand pro

183、fit margins.These factors could also increase our merchandise costs and selling,general andadministrative expenses,and otherwise adversely affect our operations and financial results.Generaleconomic conditions can also be affected by events like the outbreak of hostilities,including but notlimited t

184、o the Ukraine conflict,or acts of terrorism.Inflationary factors such as increases in merchandise costs may adversely affect our business,financialcondition and results of operations.We may not be able to adjust prices to sufficiently offset the effect ofcost increases without negatively impacting c

185、onsumer demand.Suppliers may be unable to timely supply us with quality merchandise at competitive prices ormay fail to adhere to our high standards,resulting in adverse effects on our business,merchandise inventories,sales,and profit margins.We depend heavily on our ability to purchase quality merc

186、handise in sufficient quantities at competitiveprices.As the quantities we require continue to grow,we have no assurances of continued supply,appropriate pricing or access to new products,and any supplier has the ability to change the terms uponwhich they sell to us or discontinue selling to us.Memb

187、er demands may lead to out-of-stock positionscausing a loss of sales and profits.We buy from numerous domestic and foreign suppliers and importers.Our inability to acquire suitablemerchandise on acceptable terms or the loss of key suppliers could negatively affect us.We may not beable to develop rel

188、ationships with new suppliers,and products from alternative sources,if any,may be ofa lesser quality or more expensive.Because of our efforts to adhere to high-quality standards for whichavailable supply may be limited,particularly for certain food items,the large volumes we demand may notbe consist

189、ently available.Our efforts to secure supply could lead to commitments that prove to beunsuccessful in the short and long-term.Our suppliers(and those they depend upon for materials and services)are subject to risks,includinglabor disputes,union organizing activities,financial liquidity,natural disa

190、sters,extreme weatherconditions,public health emergencies,supply constraints and general economic and political conditionsand other risks similar to those we face that could limit their ability to timely provide us with acceptablemerchandise.One or more of our suppliers might not adhere to our quali

191、ty control,packaging,legal,regulatory,labor,environmental or animal welfare standards.These deficiencies may delay or precludedelivery of merchandise to us and might not be identified before we sell such merchandise to ourmembers.This failure could lead to recalls and litigation and otherwise damage

192、 our reputation and ourbrands,increase costs,and otherwise adversely impact our business.Fluctuations in foreign exchange rates may adversely affect our results of operations.During 2023,our international operations,including Canada,generated 27%and 34%of our net salesand operating income.Our intern

193、ational operations have accounted for an increasing portion of ourwarehouses,and we plan to continue international growth.To prepare our consolidated financialstatements,we translate the financial statements of our international operations from local currencies intoU.S.dollars using current exchange

194、 rates.Future fluctuations in exchange rates that are unfavorable tous may adversely affect the financial performance of our Canadian and Other International operations andhave a corresponding adverse period-over-period effect on our results of operations.As we continue toexpand internationally,our

195、exposure to fluctuations in foreign exchange rates may increase.15A portion of the products we purchase is paid for in a currency other than the local currency of the countryin which the goods are sold.Currency fluctuations may increase our merchandise costs and may not bepassed on to members and th

196、us may adversely affect our results of operations.Natural disasters,extreme weather conditions,or other catastrophic events could negativelyaffect our business,financial condition,and results of operations.Natural disasters and extreme weather conditions,including those impacted by climate change,su

197、ch ashurricanes,typhoons,floods,earthquakes,wildfires,droughts;acts of terrorism or violence,includingactive shooter situations;and energy shortages;particularly in California or Washington state,where ourcentralized operating systems and administrative personnel are located,could negatively affect

198、ouroperations and financial performance.Such events could result in physical damage to our properties,limitations on store operating hours,less frequent visits by members to physical locations,the temporaryclosure of warehouses,depots,manufacturing or home office facilities,the temporary lack of an

199、adequatework force,disruptions to our IT systems,the temporary or long-term disruption in the supply of productsfrom some local or overseas suppliers,the temporary disruption in the transport of goods to or fromoverseas,delays in the delivery of goods to our warehouses or depots,and the temporary re

200、duction in theavailability of products in our warehouses.These events could also reduce demand for our products ormake it difficult or impossible to procure products.We may be required to suspend operations in some orall of our locations,which could have a material adverse effect on our business,fin

201、ancial condition andresults of operations.Pandemics and other health crises,including COVID-19,could affect our business,financialcondition and results of operations in many respects.The emergence,severity,magnitude and duration of global or regional health crises are uncertain anddifficult to predi

202、ct.A pandemic,such as COVID-19,could affect certain business operations,demand forour products and services,in-stock positions,costs of doing business,availability of labor,access toinventory,supply chain operations,our ability to predict future performance,exposure to litigation,and ourfinancial pe

203、rformance,among other things.Other factors and uncertainties include,but are not limited to:The severity and duration of pandemics;Evolving macroeconomic factors,including general economic uncertainty,unemployment rates,and recessionary pressures;Changes in labor markets affecting us and our supplie

204、rs;Unknown consequences on our business performance and initiatives stemming from thesubstantial investment of time and other resources to the pandemic response;The pace of post-pandemic recovery;The long-term impact of the pandemic on our business,including consumer behaviors;andDisruption and vola

205、tility within the financial and credit markets.Factors associated with climate change could adversely affect our business.We use natural gas,diesel fuel,gasoline,and electricity in our distribution and warehouse operations.Government regulations limiting carbon dioxide and other greenhouse gas emiss

206、ions and otherenvironmental restrictions may increase compliance and merchandise costs,and other regulationaffecting energy inputs could materially affect our profitability.As the economy transitions to lower carbonintensity we cannot guarantee that we will make adequate investments or successfully

207、implementstrategies that will effectively achieve our climate-related goals,which could lead to negative perceptionsamong members and other stakeholders and result in reputational harm.Climate change,extremeweather conditions,wildfires,droughts and rising sea levels could affect our ability to procu

208、recommodities at costs and in quantities we currently experience.We also sell a substantial amount of gasoline,the demand for which could be impacted by concernsabout climate change and increased regulations.More stringent fuel economy standards,changing publicpolicies aimed at increasing the adopti

209、on of zero-emission and alternative fuel vehicles and other16regulations related to climate change,and evolving consumer preferences will affect our future operationsand will adversely impact certain elements of our profitability and require significant capital expenditures.Failure to meet financial

210、 market expectations could adversely affect the market price and volatilityof our stock.We believe that the price of our stock currently reflects high market expectations for our future operatingresults.Any failure to meet or delay in meeting these expectations,including our warehouse and e-commerce

211、 comparable sales growth rates,membership renewal rates,new member sign-ups,grossmargin,earnings,earnings per share,new warehouse openings,or dividend or stock repurchase policiescould cause the price of our stock to decline.Legal and Regulatory RisksWe are subject to risks associated with the legis

212、lative,judicial,accounting,regulatory,politicaland economic factors specific to the countries or regions in which we operate,which couldadversely affect our business,financial condition and results of operations.At the end of 2023,we operated 270 warehouses outside of the U.S.(31%of all warehouse lo

213、cations),and we plan to continue expanding our international operations.Future operating results internationallycould be negatively affected by a variety of factors,many similar to those we face in the U.S.,certain ofwhich are beyond our control.These factors include political and economic condition

214、s,regulatoryconstraints,currency regulations,policy changes,and other matters in any of the countries or regions inwhich we operate,now or in the future.Other factors that may impact international operations includeforeign trade(including tariffs and trade sanctions),monetary and fiscal policies and

215、 the laws andregulations of the U.S.and foreign governments,agencies and similar organizations,and risks associatedwith having major facilities in locations which have been historically less stable than the U.S.Risksinherent in international operations also include,among others,the costs and difficu

216、lties of managinginternational operations,adverse tax consequences,and difficulty in enforcing intellectual property rights.New reporting obligations globally are increasing the cost and complexity of doing business.Changes in accounting standards and subjective assumptions,estimates and judgments b

217、ymanagement related to complex accounting matters could significantly affect our financialcondition and results of operations.Accounting principles and related pronouncements,implementation guidelines,and interpretations weapply to a wide range of matters that are relevant to our business,including

218、self-insurance liabilities,arehighly complex and involve subjective assumptions,estimates and judgments by our management.Changes in rules or interpretation or changes in underlying assumptions,estimates or judgments by ourmanagement could significantly change our reported or expected financial perf

219、ormance and have amaterial impact on our consolidated financial statements.We are exposed to risks relating to evaluations of controls required by Section 404 of theSarbanes-Oxley Act and otherwise.Section 404 of the Sarbanes-Oxley Act of 2002 requires management assessments of the effectivenessof i

220、nternal control over financial reporting and disclosure controls and procedures.If we are unable tomaintain effective internal control over financial reporting or disclosure controls and procedures,our abilityto record,process and report financial information accurately and to prepare financial stat

221、ements withinrequired time periods could be adversely affected,which could subject us to litigation or investigationsrequiring management resources and payment of legal and other expenses,negatively affect investorconfidence in our financial statements and adversely impact our stock price.Uncertaint

222、ies around ourdeveloping systems concerning controls for non-financial reporting also create risks.17Changes in tax rates,new U.S.or foreign tax legislation,and exposure to additional tax liabilitiescould adversely affect our financial condition and results of operations.We are subject to a variety

223、of taxes and tax collection and remittance obligations in the U.S.andnumerous foreign jurisdictions.Additionally,at any point in time,we may be under examination for valueadded,sales-based,payroll,product,import or other non-income taxes.We may recognize additional taxexpense,be subject to additiona

224、l tax liabilities,or incur losses and penalties,due to changes in laws,regulations,administrative practices,principles,assessments by authorities and interpretations related totax,including tax rules in various jurisdictions.We compute our income tax provision based on enactedtax rates in the countr

225、ies in which we operate.As tax rates vary among countries,a change in earningsattributable to the various jurisdictions in which we operate could result in an unfavorable change in ouroverall tax provision.Additionally,changes in the enacted tax rates or adverse outcomes in tax audits,including tran

226、sfer pricing disputes,could have a material adverse effect on our financial condition andresults of operations.Changes in or failure to comply with regulations relating to the use,storage,discharge anddisposal of hazardous materials,hazardous and non-hazardous wastes and other environmentalmatters(s

227、uch as recycling and extended producer responsibility requirements)could adverselyimpact our business,financial condition and results of operations.We are subject to a wide and increasingly broad array of federal,state,regional,local and internationallaws and regulations relating to the use,storage,

228、discharge and disposal of hazardous materials,hazardous and non-hazardous wastes and other environmental matters.Failure to comply with theselaws could result in harm to our members,employees or others,significant costs to satisfy environmentalcompliance,remediation or compensatory requirements,or t

229、he imposition of severe penalties orrestrictions on operations by governmental agencies or courts that could adversely affect our business,financial condition and results of operations.Operations at our facilities require the treatment and disposal of wastewater,stormwater and agriculturaland food p

230、rocessing wastes,the use and maintenance of refrigeration systems,including ammonia-basedchillers,noise,odor and dust management,the operation of mechanized processing equipment,andother operations that potentially could affect the environment and public health and safety.Failure tocomply with curre

231、nt and future environmental,health and safety standards could result in the imposition offines and penalties,illness or injury of our employees,and claims or lawsuits related to such illnesses orinjuries,and temporary closures or limits on the operations of facilities.We are involved in a number of

232、legal proceedings and audits and some of these outcomes couldadversely affect our business,financial condition and results of operations.Our business requires compliance with many laws and regulations.Failure to achieve compliance couldsubject us to lawsuits and other proceedings and lead to damage

233、awards,fines,penalties,andremediation costs.We are or may become involved in a number of legal proceedings and audits,including grand jury investigations,government and agency investigations,and consumer,employment,tort,unclaimed property laws,and other litigation.We cannot predict with certainty th

234、e outcomes of theseproceedings and other contingencies,including environmental remediation and other proceedingscommenced by governmental authorities.The outcome of some of these proceedings,audits,unclaimedproperty laws,and other contingencies could require us to take,or refrain from taking,actions

235、 which couldnegatively affect our operations or could require us to pay substantial amounts of money,adverselyaffecting our financial condition and results of operations.Additionally,defending against these lawsuitsand proceedings may involve significant expense and diversion of managements attentio

236、n andresources.Item 1BUnresolved Staff CommentsNone.18Item 2PropertiesWarehouse PropertiesAt September 3,2023,we operated 861 membership warehouses:Own Land and BuildingLease Land and/or Building(1)TotalUnited States and Puerto Rico.477114591Canada.9017107Other International.11053163Total.677184861_

237、(1)132 of the 184 leases are land-only leases,where Costco owns the building.At the end of 2023,our warehouses contained approximately 126.3 million square feet of operating floorspace:87.6 million in the U.S.;15.3 million in Canada;and 23.4 million in Other International.Totalsquare feet associated

238、 with distribution and logistics facilities were approximately 33.1 million.Additionally,we operate various processing,packaging,manufacturing and other facilities to support ourbusiness,which includes the production of certain private-label items.Item 3Legal ProceedingsSee discussion of Legal Proce

239、edings in Note 10 to the consolidated financial statements included inItem 8 of this Report.Item 4Mine Safety DisclosuresNot applicable.PART IIItem 5Market for Registrants Common Equity,Related Stockholder Matters and IssuerPurchases of Equity SecuritiesMarket Information and Dividend PolicyOur comm

240、on stock is traded on the NASDAQ Global Select Market under the symbol“COST.”OnOctober 3,2023,we had 10,331 stockholders of record.Payment of dividends is subject to declaration by the Board of Directors.Factors considered indetermining dividends include our profitability and expected capital needs.

241、Subject to these qualifications,we presently expect to continue to pay dividends on a quarterly basis.Issuer Purchases of Equity SecuritiesThe following table sets forth information on our common stock repurchase activity for the fourth quarterof 2023(dollars in millions,except per share data):Perio

242、dTotal Numberof SharesPurchasedAverage PricePaid perShareTotal Number ofShares Purchased asPart of PubliclyAnnouncedProgram(1)Maximum DollarValue of Sharesthat May Yet bePurchased underthe ProgramMay 8June 4,2023.107,000$498.28107,000$3,740June 5July 2,2023.102,000523.05102,0003,687July 3July 30,202

243、3.97,000548.2097,0003,634July 31September 3,2023.127,000550.58127,0003,563Total fourth quarter.433,000$530.67433,000_(1)The repurchase program is conducted under a$4,000 authorization approved by our Board of Directors in January 2023,which expires in January 2027.This authorization revoked previous

244、ly authorized but unused amounts,totaling$2,568.19Performance GraphThe following graph compares the cumulative total shareholder return assuming reinvestment ofdividends on an investment of$100 in Costco common stock,S&P 500 Index,S&P Retail Select Index,and the previously selected S&P 500 Retail In

245、dex over the five years from September 2,2018,throughSeptember 3,2023.The S&P Retail Select Index will prospectively replace in the graph the S&P 500Retail Index to show a broader representation of industry performance and a broader index of peers.Comparison of 5-Year Cumulative Total ReturnsCostcoS

246、&P 500S&P 500 RetailS&P Retail Select2002120222023$0$100$200$300The following graph provides information concerning average sales per warehouse over a 10-year period.Average Sales Per Warehouse*(Sales In Millions)Year Opened#of Whses202323$151202223$0$2013$1321521841

247、93201920$8216201821$2202214201726$6206237247201629$87973204212201523$83859431891992014&Before663$08259268Totals861$164$162$159$163$176$182$192$217$245$252200020202120222023Fiscal Year*First year sales

248、annualized.2017 and 2023 were 53-week fiscal years but have been normalized for purposes of comparabilityItem 6Reserved20Item7ManagementsDiscussionandAnalysisofFinancialConditionsandResultsofOperations(amounts in millions,except per share,share,membership fee,and warehouse count data)The following M

249、anagements Discussion and Analysis of Financial Condition and Results of Operations(MD&A)is intended to promote understanding of the results of operations and financial condition.MD&Ais provided as a supplement to,and should be read in conjunction with,our consolidated financialstatements and the ac

250、companying Notes to Financial Statements(Part II,Item 8 of this Form 10-K).Thissection generally discusses the results of operations for 2023 compared to 2022.For discussion relatedto the results of operations and changes in financial condition for 2022 compared to 2021 refer to Part II,Item 7,Manag

251、ements Discussion and Analysis of Financial Condition and Results of Operations in ourfiscal year 2022 Form 10-K,which was filed with the United States Securities and Exchange Commission(SEC)on October 5,2022.OverviewWe believe that the most important driver of our profitability is increasing net sa

252、les,particularlycomparable sales.Net sales includes our core merchandise categories(foods and sundries,non-foods,and fresh foods),warehouse ancillary(gasoline,pharmacy,optical,food court,hearing aids,and tireinstallation)and other businesses(e-commerce,business centers,travel and other).Comparable s

253、ales isdefined as net sales from warehouses open for more than one year,including remodels,relocations andexpansions,and sales related to e-commerce websites operating for more than one year.The measure isintended as supplemental information and is not a substitute for net sales presented in accorda

254、nce withU.S.generally accepted accounting principles(U.S.GAAP).Comparable sales growth is achievedthrough increasing shopping frequency from new and existing members and the amount they spend oneach visit(average ticket).Sales comparisons can also be particularly influenced by certain factors thatar

255、e beyond our control:fluctuations in currency exchange rates(with respect to our internationaloperations);inflation or deflation and changes in the cost of gasoline and associated competitiveconditions.The higher our comparable sales exclusive of these items,the more we can leverage ourSG&A expenses

256、,reducing them as a percentage of sales and enhancing profitability.Generatingcomparable sales growth is foremost a question of making available to our members the rightmerchandise at the right prices,a skill that we believe we have repeatedly demonstrated over the long-term.Another substantial fact

257、or in net sales growth is the health of the economies in which we dobusiness,including the effects of inflation or deflation,especially the United States.Net sales growth andgross margins are also impacted by our competition,which is vigorous and widespread,across a widerange of global,national and

258、regional wholesalers and retailers,including those with e-commerceoperations.While we cannot control or reliably predict general economic health or changes incompetition,we believe that we have been successful historically in adapting our business to thesechanges,such as through adjustments to our p

259、ricing and merchandise mix,including increasing thepenetration of our private-label items,and through online offerings.Our philosophy is to provide our members with quality goods and services at competitive prices.We donot focus in the short-term on maximizing prices charged,but instead seek to main

260、tain what we believe isa perception among our members of our“pricing authority”consistently providing the most competitivevalues.Merchandise costs in 2023 continued to be impacted by inflation,however at a lower rate thanwhat we experienced in 2022.The impact to our net sales and gross margin is inf

261、luenced in part by ourmerchandising and pricing strategies in response to cost increases.Those strategies can include,but arenot limited to,working with our suppliers to share in absorbing cost increases,earlier-than-usualpurchasing and in greater volumes,as well as passing cost increases on to our

262、members.Ourinvestments in merchandise pricing may include reducing prices on merchandise to drive sales or meetcompetition and holding prices steady despite cost increases instead of passing the increases on to ourmembers,all negatively impacting gross margin and gross margin as a percentage of net

263、sales(grossmargin percentage).21We believe our gasoline business enhances traffic in our warehouses,but it generally has a lower grossmargin percentage and lower SG&A expense,relative to our non-gasoline businesses.A higherpenetration of gasoline sales will generally lower our gross margin percentag

264、e.Rapidly changing gasolineprices may significantly impact our near-term net sales growth.Generally,rising gasoline prices benefitnet sales growth which,given the higher sales base,negatively impacts our gross margin percentage butdecreases our SG&A expenses as a percentage of net sales.A decline in

265、 gasoline prices has the inverseeffect.Government actions in various countries relating to tariffs,particularly China and the United States,haveaffected the costs of some of our merchandise.The degree of our exposure is dependent on(amongother things)the type of goods,rates imposed,and timing of the

266、 tariffs.Higher tariffs could adverselyimpact our results.We also achieve net sales growth by opening new warehouses.As our warehouse base grows,availableand desirable sites become more difficult to secure,and square footage growth becomes a comparativelyless substantial component of growth.The nega

267、tive aspects of such growth,however,including lowerinitial operating profitability relative to existing warehouses and cannibalization of sales at existingwarehouses when openings occur in existing markets,are continuing to decline in significance as theyrelate to the results of our total operations

268、.Our rate of square footage growth is generally higher in foreignmarkets,due to the smaller base in those markets,and we expect that to continue.Our e-commercebusiness,domestically and internationally,generally has a lower gross margin percentage than ourwarehouse operations.The membership format is

269、 an integral part of our business and has a significant effect on our profitability.This format is designed to reinforce member loyalty and provide continuing fee revenue.The extent towhich we achieve growth in our membership base,increase the penetration of our Executive members,and sustain high re

270、newal rates materially influences our profitability.Our paid-membership growth ratemay be adversely impacted when warehouse openings occur in existing markets as compared to newmarkets.Our financial performance depends heavily on controlling costs.While we believe that we have achievedsuccesses in t

271、his area,some significant costs are partially outside our control,particularly health care andutility expenses.With respect to the compensation of our employees,our philosophy is not to seek tominimize their wages and benefits.Rather,we believe that achieving our longer-term objectives ofreducing em

272、ployee turnover and enhancing employee satisfaction requires maintaining compensationlevels that are better than the industry average for much of our workforce.This may cause us,forexample,to absorb costs that other employers might seek to pass through to their workforces.Becauseour business operate

273、s on very low margins,modest changes in various items in the consolidatedstatements of income,particularly merchandise costs and SG&A expenses,can have substantial impactson net income.Our operating model is generally the same across our U.S.,Canadian,and Other International operatingsegments(see No

274、te 11 to the consolidated financial statements included in Item 8 of this Report).Certainoperations in the Other International segment have relatively higher rates of square footage growth,lowerwage and benefit costs as a percentage of sales,less or no direct membership warehouse competition,orlack

275、e-commerce or business delivery.In discussions of our consolidated operating results,we refer to the impact of changes in foreigncurrencies relative to the U.S.dollar,which are differences between the foreign-exchange rates we use toconvert the financial results of our international operations from

276、local currencies into U.S.dollars.Thisimpact of foreign-exchange rate changes is calculated based on the difference between the current andprior periods currency exchange rates.The impact of changes in gasoline prices on net sales iscalculated based on the difference between the current and prior pe

277、riods average price per gallon sold.Results expressed excluding the impacts of foreign exchange and gasoline prices should be reviewed inconjunction with results reported in accordance with U.S.GAAP.22Our fiscal year ends on the Sunday closest to August 31.References to 2023 relate to the 53-week fi

278、scalyear ended September 3,2023.References to 2022 and 2021 relate to the 52-week fiscal years endedAugust 28,2022,and August 29,2021.Certain percentages presented are calculated using actual resultsprior to rounding.Unless otherwise noted,references to net income relate to net income attributable t

279、oCostco.Highlights for 2023 versus 2022 include:We opened 26 new warehouses,including three relocations:13 net new in the U.S.and 10 new inour Other International segment.We opened the same number of new warehouses,includingrelocations,in 2022;Net sales increased 7%to$237,710,driven by a 3%increase

280、in comparable sales,sales at newwarehouses opened in 2022 and 2023,and the benefit of one additional week of sales in 2023;Membership fee revenue increased 8%to$4,580,driven by new member sign-ups,upgrades toExecutive membership,and one additional week of membership fees in 2023;Gross margin percent

281、age increased nine basis points,driven primarily by a smaller LIFO charge in2023 compared to 2022 and our core merchandise categories.This was partially offset by charges of$391,predominantly related to the discontinuation of our charter shipping activities;SG&A expenses as a percentage of net sales

282、 increased 20 basis points,due to increased costs inwarehouse operations and other businesses,primarily wage increases effective in March and July2022,and March 2023,as well as lower sales growth;The effective tax rate in 2023 was 25.9%,compared to 24.6%in 2022;Net income increased 8%to$6,292,or$14.

283、16 per diluted share compared to$5,844,or$13.14 perdiluted share in 2022;In January 2023,the Board of Directors authorized a new share repurchase program in the amountof$4,000;andIn April 2023,the Board of Directors approved a 13%increase in the quarterly cash dividend.23RESULTS OF OPERATIONSNet Sal

284、es202320222021Net Sales.$237,710$222,730$192,052Changes in net sales:U.S.7%17%16%Canada.4%16%22%Other International.9%10%23%Total Company.7%16%18%Changes in comparable sales:U.S.3%16%15%Canada.2%15%20%Other International.3%7%19%Total Company.3%14%16%E-commerce.(6)%10%44%Changes in comparable sales e

285、xcluding the impact ofchanges in foreign-currency and gasoline prices:U.S.4%10%14%Canada.8%12%12%Other International.8%10%13%Total Company.5%11%13%E-commerce.(5)%10%43%Net SalesNet sales increased$14,980 or 7%during 2023.The improvement was attributable to an increase incomparable sales of 3%,sales

286、at new warehouses opened in 2022 and 2023,and one additional week ofsales in 2023.Sales increased$12,761,or 7%in core merchandise categories,led by foods and sundriesand fresh foods;while non-foods decreased.Sales increased$2,219,or 5%in warehouse ancillary andother businesses,led by pharmacy,food c

287、ourt,and travel.During 2023,changes in foreign currencies relative to the U.S.dollar negatively impacted net sales byapproximately$3,484,156 basis points,compared to 2022,attributable to our Canadian and OtherInternational operations.The volume of gasoline sold increased approximately 7%,positively

288、impactingnet sales by$2,148,or 96 basis points.Lower gasoline prices negatively impacted net sales by$1,592,or71 basis points,compared to 2022,with a 6%decrease in the average price per gallon.Comparable SalesComparable sales increased 3%during 2023 and were positively impacted by increases in shopp

289、ingfrequency,partially offset by a decrease in average ticket.Membership Fees202320222021Membership fees.$4,580$4,224$3,877Membership fees increase.8%9%9%24Membership fee revenue increased 8%in 2023,driven by new member sign-ups,upgrades to Executivemembership,and the benefit of an additional week.C

290、hanges in foreign currencies relative to the U.S.dollar negatively impacted membership fees by$76 compared to 2022.At the end of 2023,our memberrenewal rates were 92.7%in the U.S.and Canada and 90.4%worldwide.More members auto renewingand higher penetration of Executive members benefit renewal rates

291、.Our renewal rate,which excludesaffiliates of Business members,is a trailing calculation that captures renewals during the period seven toeighteen months prior to the reporting date.We account for membership fee revenue on a deferred basis,recognized ratably over the one-yearmembership period.Gross

292、Margin202320222021Net sales.$237,710$222,730$192,052Less merchandise costs.212,586199,382170,684Gross margin.$25,124$23,348$21,368Gross margin percentage.10.57%10.48%11.13%Gross margin percentage increased nine basis points compared to 2022.Excluding the impact ofgasoline price deflation on net sale

293、s,gross margin was 10.50%,an increase of two basis points.This twobasis point increase was positively impacted by:18 basis points due to a smaller LIFO charge in 2023compared to 2022,and seven basis points due to core merchandise categories,predominantly foods andsundries.These were offset by:16 bas

294、is points due to the downsizing and then discontinuation of ourcharter shipping activities;four basis points due to increased 2%rewards;and three basis points due towarehouse ancillary and other businesses,predominantly e-commerce,partially offset by gasoline andbusiness centers.Changes in foreign c

295、urrencies relative to the U.S.dollar negatively impacted grossmargin by approximately$349,compared to 2022,attributable to our Canadian and Other InternationalOperations.The gross margin in core merchandise categories,when expressed as a percentage of core merchandisesales(rather than total net sale

296、s),increased two basis points,driven by foods and sundries and non-foods,partially offset by fresh foods.This measure eliminates the impact of changes in sales penetrationand gross margins from our warehouse ancillary and other businesses.Gross margin on a segment basis,when expressed as a percentag

297、e of the segments own sales andexcluding the impact of changes in gasoline prices on net sales(segment gross margin percentage),increased in our U.S.segment,due to a smaller LIFO charge and increases in core merchandisecategories,primarily foods and sundries,partially offset by the charges related t

298、o the discontinuation ofour charter shipping activities discussed above and warehouse ancillary and other businesses.Grossmargin percentage increased in our Canada segment,attributable to increases in core merchandisecategories and warehouse ancillary and other businesses.Our Other International gro

299、ss marginpercentage decreased,largely due to decreases in core merchandise categories,partially offset bywarehouse ancillary and other businesses.All segments were negatively impacted by increased 2%rewards.Selling,General and Administrative Expenses202320222021SG&A expenses.$21,590$19,779$18,537SG&

300、A expenses as a percentage of net sales.9.08%8.88%9.65%25SG&A expenses as a percentage of net sales increased 20 basis points compared to 2022.SG&Aexpenses as a percentage of net sales excluding the impact of gasoline price deflation was 9.02%,anincrease of 14 basis points.The comparison to last yea

301、r was negatively impacted by 16 basis points inwarehouse operations and other businesses,largely driven by wage increases effective in March and July2022,and March 2023,as well as lower sales growth.Central operating costs were also higher by sixbasis points.SG&A was positively impacted by eight bas

302、is points due to the prior years write-off ofinformation technology assets and a charge related to granting our employees additional vacation.Changes in foreign currencies relative to the U.S.dollar decreased SG&A expenses by approximately$281 compared to 2022,attributable to our Canadian and Other

303、International Operations.Interest Expense202320222021Interest expense.$160$158$171Interest expense is primarily related to Senior Notes and financing leases.For more information on ourdebt arrangements,refer to the consolidated financial statements included in Item 8 of this Report.Interest Income a

304、nd Other,Net202320222021Interest income.$470$61$41Foreign-currency transaction gains,net.2910656Other,net.343846Interest income and other,net.$533$205$143The increase in interest income in 2023 was due to higher global interest rates and higher average cashand investment balances.Foreign-currency tr

305、ansaction gains,net include revaluation or settlement ofmonetary assets and liabilities by our Canadian and Other International operations and mark-to-marketadjustments for forward foreign-exchange contracts.See Derivatives and Foreign Currency sections inNote 1 to the consolidated financial stateme

306、nts included in Item 8 of this Report.Provision for Income Taxes202320222021Provision for income taxes.$2,195$1,925$1,601Effective tax rate.25.9%24.6%24.0%The effective tax rate for 2023 was impacted by net discrete tax benefits of$62,primarily due to excesstax benefits related to stock compensation

307、.Excluding discrete net tax benefits,the tax rate was 26.6%.The effective tax rate for 2022 was impacted by net discrete tax benefits of$130,primarily due to excesstax benefits related to stock compensation.Excluding discrete net tax benefits,the tax rate was 26.2%.LIQUIDITY AND CAPITAL RESOURCESThe

308、 following table summarizes our significant sources and uses of cash and cash equivalents:202320222021Net cash provided by operating activities.$11,068$7,392$8,958Net cash used in investing activities.(4,972)(3,915)(3,535)Net cash used in financing activities.(2,614)(4,283)(6,488)26Our primary sourc

309、es of liquidity are cash flows from operations,cash and cash equivalents,and short-term investments.Cash and cash equivalents and short-term investments were$15,234 and$11,049 atSeptember 3,2023,and August 28,2022.Of these balances,unsettled credit and debit card receivablesrepresented$2,282 and$2,0

310、10.These receivables generally settle within four days.Changes in foreignexchange rates impacted cash and cash equivalents positively by$15 and$46 in 2023 and 2021,andnegatively by$249 in 2022.Material contractual obligations arising in the normal course of business primarily consist of purchaseobli

311、gations,long-term debt and related interest payments,leases,and construction and land purchaseobligations.See Notes 4 and 5 to the consolidated financial statements included in Item 8 of this Reportfor amounts outstanding on September 3,2023,related to debt and leases.Purchase obligations consist of

312、 contracts primarily related to merchandise,equipment,and third-partyservices,the majority of which are due in the next 12 months.Construction and land-purchase obligationsconsist of contracts primarily related to the development and opening of new and relocated warehouses,the majority of which(othe

313、r than leases)are due in the next 12 months.Management believes that our cash and investment position and operating cash flows,with capacityunder existing and available credit agreements,will be sufficient to meet our liquidity and capitalrequirements for the foreseeable future.We believe that our U

314、.S.current and projected asset position issufficient to meet our U.S.liquidity requirements.Cash Flows from Operating ActivitiesNet cash provided by operating activities totaled$11,068 in 2023,compared to$7,392 in 2022.Our cashflow provided by operations is primarily from net sales and membership fe

315、es.Cash flow used inoperations generally consists of payments to merchandise suppliers,warehouse operating costs,including payroll and employee benefits,utilities,and credit and debit card processing fees.Cash used inoperations also includes payments for income taxes.Changes in our net investment in

316、 merchandiseinventories(the difference between merchandise inventories and accounts payable)is impacted byseveral factors,including inventory levels and turnover,the forward deployment of inventory to acceleratedelivery times,payment terms with suppliers,and early payments to obtain discounts.Cash F

317、lows from Investing ActivitiesNet cash used in investing activities totaled$4,972 in 2023,compared to$3,915 in 2022,and is primarilyrelated to capital expenditures.Net cash flows from investing activities also includes purchases andmaturities of short-term investments.Capital ExpendituresOur primary

318、 requirements for capital are acquiring land,buildings,and equipment for new and remodeledwarehouses.Capital is also required for information systems,manufacturing and distribution facilities,initial warehouse operations,and working capital.In 2023,we spent$4,323 on capital expenditures,andit is our

319、 current intention to spend approximately$4,400 to$4,600 during fiscal 2024.These expendituresare expected to be financed with cash from operations,existing cash and cash equivalents,and short-term investments.We opened 26 new warehouses,including three relocations,in 2023,and plan to openup to 28 a

320、dditional new warehouses,including one relocation,in 2024.There can be no assurance thatcurrent expectations will be realized,and plans are subject to change upon further review of our capitalexpenditure needs and the economic environment.27Cash Flows from Financing ActivitiesNet cash used in financ

321、ing activities totaled$2,614 in 2023,compared to$4,283 in 2022.Cash flowsused in financing activities primarily related to the payment of dividends,repurchases of common stock,and withholding taxes on stock-based awards.In 2022,cash flow used in financing activities includedpayments to our former jo

322、int-venture partner for a dividend and the purchase of their equity interest inTaiwan,totaling$1,050 in the aggregate,and repayments of our 2.300%Senior Notes.Stock Repurchase ProgramsOn January 19,2023,the Board of Directors authorized a new share repurchase program in the amountof$4,000,which expi

323、res in January 2027.During 2023 and 2022,we repurchased 1,341,000 and863,000 shares of common stock,at average prices of$504.68 and$511.46,totaling approximately$677and$442.These amounts may differ from the accompanying consolidated statements of cash flows dueto changes in unsettled repurchases at

324、the end of each fiscal year.Purchases are made from time totime,as conditions warrant,in the open market or in block purchases,pursuant to plans under SEC Rule10b5-1.Repurchased shares are retired,in accordance with the Washington Business Corporation Act.The remaining amount available to be purchas

325、ed under our approved plan was$3,563 at the end of2023.DividendsCash dividends declared in 2023 totaled$3.84 per share,as compared to$3.38 per share in 2022.InApril 2023,the Board of Directors increased our quarterly cash dividend from$0.90 to$1.02 per share.Bank Credit Facilities and Commercial Pap

326、er ProgramsWe maintain bank credit facilities for working capital and general corporate purposes.At September 3,2023,we had borrowing capacity under these facilities of$1,234.Our international operations maintain$756 of this capacity under bank credit facilities,of which$167 is guaranteed by the Com

327、pany.Short-termborrowings outstanding under the bank credit facilities,which are included in other current liabilities on theconsolidated balance sheets,were immaterial at the end of 2023 and 2022.The Company has letter of credit facilities,for commercial and standby letters of credit,totaling$217.T

328、heoutstanding commitments under these facilities at the end of 2023 totaled$182,most of which werestandby letters of credit that do not expire or have expiration dates within one year.The bank creditfacilities have various expiration dates,most within one year,and we generally intend to renew thesef

329、acilities.The amount of borrowings available at any time under our bank credit facilities is reduced by theamount of standby and commercial letters of credit outstanding.Off-Balance Sheet ArrangementsIn the opinion of management,we have no off-balance sheet arrangements that have had or arereasonabl

330、y likely to have a material current or future effect on our financial condition or financialstatements.Critical Accounting EstimatesThe preparation of our consolidated financial statements in accordance with U.S.GAAP requires that wemake estimates and assumptions that affect the reported amounts of

331、assets and liabilities and thedisclosure of contingent assets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.We base our estimates on historicalexperience and on assumptions that we believe to be reasonable,and we

332、continue to review andevaluate these estimates.For further information on significant accounting policies,see discussion inNote 1 to the consolidated financial statements included in Item 8 of this Report.28Insurance/Self-insurance LiabilitiesClaims for employee health-care benefits,workers compensa

333、tion,general liability,property damage,directors and officers liability,vehicle liability,inventory loss,and other exposures are fundedpredominantly through self-insurance.Insurance coverage is maintained for certain risks to seek to limitexposures arising from very large losses.We use various risk management mechanisms,including awholly-owned captive insurance subsidiary,and participate in a rein