Costco Presentation

1. Industry Overview Annual Revenue 462 Billion 2009-14 Growth: 3.5% 2014-19 Growth Projection: 2.1% Costco/Wal-Mart: account for over 82% of market share

2. Industry Performance Key External Drivers Per Capita Disposable Income Corporate Profit Time spent on Leisure & Sports Product Offerings Kirkland Brand

3. Industry Performance, Cont’d Key External Drivers (Cont’d) Competition World Price of Crude Oil Costco Gas Time spent on Leisure & Sports

4. Costco-Company Overview 451 Warehouses 67 Million Members Inventory: 3,600 items/store 2014: 79 Billion in Revenue (6.9% Increase)

5. Strengths Pricing Authority Consistently provide competitive price Gasoline Lower cost, brings members to warehouses Brand Loyalty High quality products Market share growth Increased customer base

6. Weaknesses Geographic Dependence U.S. & Canada: 87% of total Sales in 2014 California: 32% of U.S. sales Older Customer Base Baby Boomers Growing older, spending less

7. Opportunities Attract Younger Customers 19-34 Demographic E-Commerce Google Express & InstaCart Higher quality apparel Organic foods

8. Threats Competition Highly Competitive Sam’s BJ’s Non-Member Retailers Wal-Mart Target Internet Retail Amazon

9. Company Analysis Business Strategy Lower In-Store Inventory Focus on Higher End Goods Slow Expansion Historical Value Stock Price (as of 4/24/15: $148.12 1 year growth: 32.52% 5 year growth: 146.04 %