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Correspondence Letter

 Writer’s Direct Number:

(425) 313-8203

 Fax:

(425) 313-6593

 February 9, 2007

 BY TELECOPIER AND COURIER

 Michael Moran

 Accounting Branch Chief

 United States Securities and Exchange Commission

 Mail Stop 3561

 Washington, D.C. 20549

Re:

Costco Wholesale Corp. — Form 10-K for the Fiscal Year Ended September 3, 2006, filed November 17, 2006, and Form 10-Q for the Fiscal Quarter Ended November 26,
2006, filed December 22, 2006 — File No. 0-20355

 Dear Mr. Moran:

 In response to your letter of January 26, please see the text below, which corresponds to the numbered paragraphs in your
letter.1

 Form 10-K
for the Fiscal Year Ended September 3, 2006

 Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of
Operations

 Results of Operations, page 16

2.

You disclose that net sales increased 13.7% during fiscal 2006, or $7.1 billion and provide several business reasons for the overall change such as new store openings and the
additional week of sales in 2006. However, except for gasoline, you do not provide any quantification of the impact of the other business reasons by disclosing the specific dollar amounts attributable to each of the other reasons so that

 1

 We advised Mr. Milwood Hobbs on February 1 that we would be responding by February 9
rather than by the deadline requested in the letter.

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

investors can better understand what factors caused most of the $7.1 billion change during 2006. Please revise your disclosure to include the amount of
each significant change in line items between periods and relate it to the business reasons for it. In circumstances where there is more than one business reason for the change during the fiscal year such as in 2006, please quantify the incremental
impact of each individual business reason discussed. Please also carefully review each expense category being analyzed and revise your discussion of changes in expenses to address this comment. Refer to Item 303(a)(3) of Regulation S-K.

 Response: This provision of Regulation S-K provides: “To the extent that the financial statements disclose
material increases in net sales . . . , provide a narrative discussion of the extent to which such increases are attributable to increases in prices or to increase in the volume or amount of goods or services being sold or to the introduction of new
products or services.” While we believe that our prior disclosures satisfied this standard, a revised disclosure concerning the discussion of sales is included below. Please note also that page 4 in Item 1 contained detail concerning the
percentage of net sales accounted for by major categories for three fiscal years, enabling investors to see whether there has been any change in the mix of goods sold. We have not specifically quantified the impacts of average ring and traffic
counts because the methods of calculation are not sufficiently determinate to support such detail (due to the disparate places within the warehouse that may ring up sales by a member during a single visit). We have reviewed expense categories, as
requested, and do not believe that additional disclosure is required. Current disclosures concerning expense levels contain detail in many cases down to the single basis point level.

 Proposed disclosure:

 Net Sales

Fiscal 2006

Fiscal 2005

Fiscal 2004

 Net sales

$
58,963,180

$
51,879,070

$
47,148,627

 Net sales increase

13.7
%

10.0
%

13.1
%

 Increase in comparable warehouse sales

8
%

7
%

10
%

 Warehouse openings (net of relocations)

25

16

20

 2

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

 2006 vs. 2005

 Net sales increased to $58.96 billion in fiscal 2006, from $51.88 billion in fiscal 2005. The 13.7% increase was primarily due to: 8% comparable warehouse sales growth (6.5% excluding gasoline and 7.2% excluding
effects from stronger foreign currencies); 3.7% from the opening of 25 net new warehouses (28 opened, 3 closed due to relocations); and 2% from an additional week in fiscal 2006 as compared to the prior year. Most of the comparable sales growth
derived from increased amounts spent by members visiting our warehouses; increases in frequency of shopping contributed slightly. Comparable sales growth was slightly offset by cannibalization (established warehouses losing sales to our newly opened
locations).

 Changes in prices of merchandise, with the exception of gasoline, did not materially affect the sales increase. Gasoline sales
contributed approximately 235 basis points to total sales growth in fiscal 2006, with 70% related to the increase in gasoline sales prices.

 Net Sales

3.

You disclose that the increase of 8% comparable sales was a major contributor to your growth in net sales. Further, your disclosure throughout the filing appears to indicate that
your increase in gasoline sales was a significant contributor to the overall increase in net sales for fiscal 2006. In this regard, and given the wide fluctuations in gasoline prices during recent years, please tell us if consideration has been
given to presenting a second calculation of the change in comparable warehouse sales that excludes gasoline sales. By presenting a second calculation of comparable warehouse sales without gasoline sales investors should be able to better understand
this very important key retail statistic. Refer to Item 303(a)(3)(iii) of Regulations S-K.

 Response: This comment is
addressed in the proposed disclosure provided above.

 3

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

 Critical Accounting Policies, page 27

 General

4.

We note your disclosure in Form 10-Q filed on December 22, 2006 in Management’s Discussion and Analysis on page 18 that certain annual payroll related expenses relating
to warehouse and central operating costs have been estimated for the entire fiscal year and allocated evenly over 13 periods. Please explain to us more clearly the nature of the cost being estimated, provide us support for the impact of this process
on quarterly results, and the reason why you do not disclose the process of estimating these amounts as a critical accounting policy.

 Response: In the first fiscal quarter of 2007, as disclosed in the Form 10-Q, we revised the method of allocating among quarters certain payroll-related expenses. The primary components of this change were payroll
taxes and the Company’s discretionary 401(k) match. Our fiscal year ends in August whereas certain payroll-related expenses are incurred (and reset annually) based on the calendar year. For example, our discretionary 401(k) employer match is
calculated based on the employee’s calendar year earnings. Since there is a ceiling on the match, many employees “max-out” on the match in the first half of the calendar year.

 Our prior method allocated these costs over our fiscal year by estimating, again using the 401(k) example, our expected total discretionary employer match
as a percentage of our total payroll for the fiscal year, and then charging each period a pro-rata amount based on the payroll expense for that period. Under our new method, the charge recorded each period is based on the amount incurred to date.

 As shown in the following table, the difference between our prior method and our revised method is relatively small in each quarter and
there is no difference on an annual basis. However, in our first quarter, the impact improved our reported EPS by $.01. In the interest of transparency, we decided to disclose the change.

 The impact of this change on fiscal 2006 is as follows:

 4

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

 Fiscal
2006

 Component

 Q1

 Variance

 Q2

 Variance

 Q3

 Variance

 Q4

 Variance

 Total

 Variance

 401(k)

$
6,179

$
(5,244
)

$
(4,780
)

$
3,845

$
—

 Payroll Taxes

1,797

(3,119
)

(5,785
)

7,107

—

 Other

1,122

4,976

(4,472
)

(1,626
)

—

 Total

$
9,098

$
(3,387
)

$
(15,037
)

$
9,326

$
—

 The Company did not consider this item to be one of its critical accounting policies, because the
total annual expense ultimately recognized each fiscal year is unaffected by this treatment.

 Item 9A-Controls and Procedures

 Disclosure Controls and Procedures, page 32

5.

We note that you state that your disclosure controls and procedures are effective in ensuring that information required to be disclosed is recorded, processed, summarized and
reported within the time periods specified. If you choose to include the definition of disclosure controls and procedures, please include the entire definition. In this regard, in future filings, please revise to clarify, if true, that your officers
concluded that your disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that you file or submit under the Exchange Act is accumulated and communicated to your management, including
your principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

 Response: Future disclosures will be revised accordingly.

 Consolidated Financial Statements

 Notes to Consolidated Financial Statements

 Note 1 – Summary
of Significant Accounting Policies

 Vendor Rebates and Allowances, page 46

 Marketing and Promotional Expenses, page 51

6.

 We note from your disclosure that you receive certain vendor allowances and credits in connection with the sale and promotion of certain vendor products.
Please

 5

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

tell us if any of the amounts received from vendors relate to any cooperative advertising, marketing or promotional programs that vendors participate in
with you. In this regard, please tell us and disclose the amount of cooperative advertising reimbursements that may be netted against gross advertising expense. In addition, we believe you should also include in your revised footnote disclosure the
following additional information:

•

 the number of vendors and the length of time of the agreements;

•

 the terms (length of time) and conditions of the agreements;

•

 whether or not management would continue to incur the same level of advertising expenditures even if vendors discontinued their support;

•

 if management cannot represent that they will continue to incur similar levels of advertising expenditures in the absence of these vendor agreements, please
discuss in management’s discussion and analysis that reductions in the current level of advertising expenditures may adversely affect revenues; and

•

 the dollar amount of the excess reimbursements, if any, over costs incurred that are recorded as a reduction of cost of sales.

Refer to EITF 02-16 and paragraph .49 of SOP 93-7 relating to gross advertising costs.

 Response: Certain amounts received from vendors do relate to marketing and promotional programs. For example, promotional programs include endcaps,
product demonstrations and coupon mailings, which are often funded entirely by vendors. These amounts are generally credited to cost of sales at the time the merchandise is sold in accordance with EITF 02-16. The Company does not, however, generally
engage in cooperative advertising. The Company is quite unlike other retailers in that we are not paying third-party print, broadcast or internet media to advertise our products or services. The Company does publish and circulate to certain Costco
members, free of charge, the Costco Connection (a monthly lifestyle magazine), an annual cookbook, and limited other publications. We receive funds from the vendors that choose to advertise in these publications, generally as dictated by a rate card
or

 6

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

similar mechanism and not based on an agreement that the vendor will bear a specific percentage of expense incurred. In accordance with EITF 02-16, because
the vendor funds reimburse specific, identifiable and incremental costs incurred by the Company to sell the vendors products, we account for the receipt of a portion of the funds received from vendors as a reduction of our costs associated with
these publications. Funds received in excess of these costs are classified as a reduction of cost of sales over the time period the merchandise advertised is sold. Excess funds related to our publishing activities are approximately .09 basis points
of total consolidated cost of sales, which we deemed immaterial and not requiring disclosure.

 Goodwill, page 48

7.

Please disclose when you perform your annual test of goodwill for impairment. See paragraph 26 of SFAS 142.

 Response: The Company reviews previously reported goodwill for impairment in the fourth quarter of each fiscal year, or more frequently if circumstances
dictate. Future disclosures will be revised accordingly.

 Revenue Recognition, page 50

8.

You disclose that for certain merchandise sales you evaluate the criteria outlined in EITF 99-19 in determining whether it is appropriate to record the gross amount of the
merchandise sales and related costs or the net amount earned as commissions. Please clarify for us and revise your disclosure to identify the types of merchandise sales as opposed to services rendered which require this type of evaluation and the
amount of commissions classified in net sales for all periods presented.

 Response: The following types of merchandise
may, depending upon the particular facts and circumstances, require accounting on a net basis: event tickets (such as movie theatres and theme parks); gift certificates (for restaurants, resorts, and merchandise) and pre-paid phone cards.

 7

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

 The net commissions earned on items not meeting the criteria for gross treatment in fiscal 2006 were
less than 0.2 basis points of total consolidated sales, which we deemed immaterial and not requiring disclosure.

 Note 10 – Commitments and
Contingencies, page 70

9.

We note your disclosure of the matters in which you are a defendant. In future filings, please expand your disclosure to provide an estimate of the possible loss or range of loss
or clearly state that an estimate can not be made. See SFAS 5, paragraph 10.

 Response: Future disclosures will be revised
accordingly.

 Note 11 – Staff Accounting Bulletin No. 108, page 71

10.

We note your adoption of SAB 108 and your disclosure on page 72 of the net after-tax effect of the adjustment on reported net income representing a total adjustment of $116
million. In connection with our review of this information, please provide us by year the amount of the before-tax effect of the adjustment by year, including the separate before-tax and after-tax amounts for each year within the period 1996 through
2001.

 Response: See below.

Incremental Expense (000’s)

 Fiscal Year

Net Book
Expense

Tax
Deduction

Net

 Fiscal 1996

$
12

$
4

$
8

 Fiscal 1997

$
1,540

$
510

$
1,030

 Fiscal 1998

$
7,769

$
2,641

$
5,128

 Fiscal 1999

$
28,752

$
9,665

$
19,087

 Fiscal 2000

$
49,521

$
16,397

$
33,124

 Fiscal 2001

$
34,973

$
11,540

$
23,432

 Fiscal 2002

$
22,016

$
7,144

$
14,872

 Fiscal 2003

$
13,386

$
4,294

$
9,092

 Fiscal 2004

$
9,572

$
3,142

$
6,430

 Fiscal 2005

$
5,853

$
1,900

$
3,954

 Total

$
173,394

$
57,237

$
116,157

 8

 Michael Moran, Accounting Branch Chief

 United States Securities and Exchange Commission

 February 9, 2007

 Form 10 – Q for the Fiscal Quarter Ended November 26, 2006

 Item