COsTCO WHOLesALe IN 2018 In June 2018, Costco was operating 750 membership warehouses, including 520 in the United States and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in South Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in France, and 1 in Iceland. Costco also sold merchandise to mem-bers at websites in the United States, Canada, the United Kingdom, Mexico, South Korea, and Taiwan. Over 90 million cardholders were entitled to shop at Costco as of January 2018; in fiscal year 2017, mem-bership fees generated over $2.85 billion in revenues for the company. Headed into 2018, on average, traffic at Costcos warehouse locations averaged 3 million EXHIBIT 1 members per day. Annual sales per store averaged about $170 million ($3.3 million per week) in 2017, over 70 percent higher than the $99.2 million per year and $1.9 million per week averages for Sams Club, Costcos chief competitor. In 2014, 165 of Costcos warehouses generated sales exceeding $200 million annually, up from 56 in 2010; and 60 warehouses had sales exceeding $250 million, including two that had more than $400 million in sales.4 In 2018, Costco was the only national retailer in the history of the United States that could boast of average annual revenue in excess of $170 million per location. Exhibit 1 contains a financial and operating summary for Costco for fiscal years 2000, 2005, and from 2014 through 2017.

Quastion.

Based on Costcos Financial and Operating Data in the case, share your view on at least 3 positive financial trends and 1 concerning financial metric or trend.

Fiscal years ending on Sunday closest to August 31 Selected Income Statement Data 2017 2016 2015 2014 2005 2000 $31,621 $126,172 $116,073 $113,666 $110,212 $51,862 Net sales Membership fees 2,853 2,646 2,533 2,428 1,073 544 Total revenue 129,025 118,719 112,640 32,164 116,199 52,935 Operating expenses Merchandise costs 111,882 102,901 101,065 98,458 46,347 28,322 12,950 Selling, general and 12,068 11,445 10,899 5,044 2,755 administrative 78 Preopening expenses Provision for impaired assets and store closing costs 82 65 63 53 42 16 7 Total operating expenses 124,914 115,047 112,575 109,420 51,460 31,126 3,672 3,220 Operating income 4,111 3,624 1,474 1,037 Other income (expense) (133) Interest expense (134) (124) (113) (34) (39) Interest income and other, net 109 62 80 104 90 54 Income before income taxes 4,039 3,619 3,604 3,197 1,549 1,052 Provision for income taxes 1,325 1,243 1,195 1,109 486 421 $ 2,350 $ 2,058 1,063 2,714 2,377 Net income 631 $5.33 $4.65 $2.18 $ $ $5.37 Diluted net income per share 6.08 1.35 $1.70 $1.51 $1.33 Dividends per share (not including special dividend of $7.00 in 2017 and $5.00 in 2015) 1.90 0.43 0.00 Millions of shares used in 440.9 442.5 492.0 441.3 442.7 475.7 per share calculations 2017 2016 2015 2014 2005 2000 Balance Sheet Data 4,546 $3,379 4,801 2,063 $525 Cash and cash equivalents 5,738 8,969 8,908 Merchandise inventories 9,834 8,456 4,015 2,490 17,588 3,470 Current assets 17,317 15,218 16,779 8,238 Current liabilities 17,485 15,575 16,539 14,412 6,761 3,404 Net property and equipment 7,790 18,161 17,043 15,401 14,830 4,834 36,347 33,163 Total assets 33,017 33,024 16,514 8,634 Long-term debt 5,093 711 790 6.573 4,061 4,852 Stockholders' equity 12,079 10,617 12,515 10,778 8,881 4,240 Cash Flow Data Net cash provided by operating $6,726 3,292 $4,285 $3,984 1,773 $1,070 activities Warehouse Operations 292 Warehouses in operation at beginning of year New warehouses opened (including relocations) 715 686 663 634 417 28 33 26 30 21 25 Existing warehouses closed (including relocations) (2) (4) (3) (1) (5) (4) Warehouses at end of year 741 715 686 663 433 313 $ $ $ $ 170 166 120 Net sales per warehouse open at year-end (in millions) 162 166 101 Average annual growth at warehouses open more than a year (excluding the impact of changing gasoline prices and foreign 4% 4% 7% 6% 7% 11% A Warehouses in operation at beginning of year 715 686 663 634 417 292 New warehouses opened (including relocations) 28 33 26 30 21 25 Existing warehouses closed (including relocations) |(2) (4) (3) (1) (5) (4) Warehouses at end of year 741 715 686 663 433 313 $ 170 120 $ $ Net sales per warehouse open at year-end (in millions) 162 166 166 101 Average annual growth at warehouses open more than a year (excluding the impact of changing gasoline prices and foreign exchange rates) 4% 4% 7% 6% 7% 11% Members at year-end Businesses, including add-on members (000s) 10,800 10,800 10,600 10,400 5,000 4,200 31,600 16,200 10,500 Gold Star members (000s) 38,600 36,800 34,000 44,600 42,000 Total paid members 49,400 47,600 21,200 14,700 Household cardholders that both 42,600 42,600 40,200 34,400 n.a n.a. business and Gold Star members were automatically entitled to receive Total cardholders 90,300 86,700 81,300 76,400