Company: COST
Filing Date: 2025-06-05
Form Type: 10-Q
Source: 0000909832-25-000033
Chunk: 28

Company: COSTCO WHOLESALE CORP /NEW
Filing Date: 2025-06-05
Form: 10-Q
Item: Item 1
Chunk 28
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 was negatively impacted by 23 basis points due to a LIFO charge for higher merchandise costs and two basis points for a one-time expense for increased employee vacation. Changes in foreign currencies relative to the U.S. dollar negatively impacted gross margin by approximately $80, compared to the third quarter of 2024, attributable to our Other International and Canadian operations.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 36 basis points. The increase was across all categories, most significantly fresh foods which benefited from sales leverage, higher productivity, and lower prices for certain commodities. This measure eliminates the impact of changes in sales penetration and gross margin from our warehouse ancillary and other businesses.

21

Gross margin percentage on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), increased in our U.S. segment, which performed similarly to the consolidated results above. Our Canadian segment gross margin percentage increased, primarily due to increases in core merchandise categories and warehouse ancillary and other businesses. Gross margin increased in our Other International segment, primarily due to increases in warehouse ancillary and other businesses.

Year-to-date Results

Gross margin percentage increased 23 basis points. Excluding the impact of gasoline price deflation on net sales, gross margin percentage increased to 11.03%, 14 basis points. This increase was positively impacted by 18 basis points in our core merchandise categories, primarily due to increases in our co-branded credit card program and fresh foods, and four basis points in warehouse ancillary and other businesses, primarily e-commerce, partially offset by gasoline. Gross margin percentage was negatively impacted by eight basis points due to a LIFO charge. Changes in foreign currencies relative to the U.S. dollar negatively impacted gross margin by approximately $238, compared to the first thirty-six weeks of 2024, attributable to our Other International and Canadian operations.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased ten basis points. The increase was primarily due to fresh foods and foods and sundries, partially offset by non-foods.

Segment gross margin percentage increased in all segments. Our U.S. segment performed similarly to the consolidated results above. Our Canadian and Other International segments gross margin increased, primarily due to increases in core merchandise categories.

Selling, General and Administrative Expenses12 Weeks Ended36 Weeks EndedMay