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March 3, 2004 at 4:01 AM EST

Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal 2004 and February Sales Results

ISSAQUAH, Wash.--(BUSINESS WIRE)--March 3, 2004--Costco Wholesale Corporation (Nasdaq: COST) announced today its operating results for the second quarter (12 weeks) and first half (24 weeks) of fiscal 2004, both ended February 15, 2004.

Net sales for the second quarter of fiscal 2004 increased 14% to $11.33 billion from $9.92 billion during the second quarter of fiscal 2003. Net income for the second quarter of fiscal 2004 increased 25% to $226.8 million, or $.48 per diluted share, compared to $182.1 million, or $.39 per diluted share, during the second quarter of fiscal 2003. Included in the second quarter fiscal 2003 operating results was a pre-tax charge of $26 million ($16 million, or $.03 per share after tax) reflecting an increase in workers' compensation loss reserves.

Net sales for the first half of fiscal 2004 increased 14% to $21.64 billion from $18.93 billion during the first half of fiscal 2003. Net income for the first half of fiscal 2004 increased 18% to $387.0 million, or $.82 per diluted share, compared to net income for the first half of fiscal 2003 of $327.8 million, or $.70 per diluted share.

In addition to reporting second quarter fiscal year 2004 operating results, the Company today reported net sales of $3.49 billion for the 4-week retail reporting month of February, the four weeks ended February 29, 2004, an increase of 14% from $3.07 billion in the same four-week period of the prior fiscal year.

For the 6-month retail reporting period of September through February, the twenty-six weeks ended February 29, 2004, which includes the first two weeks of the Company's fiscal third quarter, the Company reported net sales of $23.41 billion, an increase of 14% from $20.45 billion during the comparable period of the prior fiscal year.

Comparable sales for the 4-week retail-reporting month of February and the 26-week retail-reporting period of September through February are as follows:

                                                           4      26
                                                          Weeks  Weeks
                                                         ------ ------
US                                                          9%     9%
International                                              21%    21%

Total Company                                              11%    11%
                                                         ====== ======

Comparable sales for the fiscal second quarter (12 weeks) and fiscal first half (24 weeks) of fiscal 2004, both ended February 15, 2004, are as follows:

                                                           12     24
                                                          Weeks  Weeks
                                                         ------ ------
US                                                         10%     9%
International                                              20%    21%

Total Company                                              11%    11%
                                                         ====== ======

Current year sales results in all of the above comparisons were positively impacted by stronger foreign currencies and, since October 12, 2003, the Southern California grocery strike.

Costco currently operates 431 warehouses, including 318 in the United States, 63 in Canada, 15 in the United Kingdom, five in Korea, three in Taiwan, four in Japan and 23 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com. The Company plans to open seven to eight additional new warehouses (including the relocation of one warehouse to a larger and better-located facility) prior to the end of its fiscal year ending August 29, 2004.

A conference call to discuss these second quarter results is scheduled for 8:00 a.m. (PST) today (March 3rd), and is available via a webcast on www.costco.com (go to Customer Service, Investor Relations, Financial Releases and click on the "Live Webcast" icon).


                     COSTCO WHOLESALE CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                              (unaudited)


                        12 Weeks Ended            24 Weeks Ended
                   ------------------------- -------------------------
                   February 15, February 16, February 15, February 16,
                       2004         2003         2004         2003
                   ------------ ------------ ------------ ------------

REVENUE
 Net sales         $11,330,214  $ 9,920,324  $21,640,036  $18,930,895
 Membership fees
  and other            218,760      193,843      430,416      381,857
                   ------------ ------------ ------------ ------------
  Total revenue     11,548,974   10,114,167   22,070,452   19,312,752
OPERATING EXPENSES
 Merchandise costs  10,101,977    8,840,411   19,322,099   16,889,308
 Selling, general
  and administrative 1,084,605      967,051    2,117,018    1,855,830
 Preopening expenses     4,216        7,145       14,341       25,262
 Provision for
  impaired assets
  and closing costs      3,000        4,500        7,000        9,500
                   ------------ ------------ ------------ ------------
  Operating income     355,176      295,060      609,994      532,852
OTHER INCOME (EXPENSE)
 Interest expense       (8,261)      (8,003)     (16,736)     (16,471)
 Interest income
  and other             13,072        8,983       20,975       16,617
                   ------------ ------------ ------------ ------------
INCOME BEFORE INCOME
 TAXES                 359,987      296,040      614,233      532,998
 Provision for
  income taxes         133,195      113,975      227,266      205,204
                   ------------ ------------ ------------ ------------
NET INCOME         $   226,792  $   182,065  $   386,967  $   327,794
                   ============ ============ ============ ============

NET INCOME PER
 COMMON AND COMMON
 EQUIVALENT SHARE:
 Basic             $      0.49  $      0.40  $      0.85  $      0.72
                   ============ ============ ============ ============
 Diluted           $      0.48  $      0.39  $      0.82  $      0.70
                   ============ ============ ============ ============
Shares used in
 calculation (000's)
 Basic                 458,228      455,927      457,929      455,748
 Diluted               481,537      478,564      480,885      478,742

CONTACT: Costco Wholesale Corporation, Issaquah Richard Galanti, 425-313-8203 Bob Nelson, 425-313-8255 Jeff Elliott, 425-313-8264 SOURCE: Costco Wholesale Corporation