Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello and welcome to the Annual Shareholders Meeting of Costco Wholesale Corporation. This meeting is being recorded. [Operator Instructions] Some of the comments today may contain forward-looking statements. Additional information about this is included among your meeting materials available on your screen. It is now my pleasure to turn the meeting over to Tony James, Chairman of the Board of Directors at Costco.

Thank you, Anne, and good afternoon, everyone. I want to welcome you to the 2021 annual meeting of shareholders for Costco. I'm Tony James, Chairman of the Board, and this is our first virtual stockholders' meeting. Before we get started, I want to make a few other introductions. John Sullivan, our Corporate Secretary, will act as secretary for this meeting. Deanna Nakashima, acting as inspector of election, will be counting ballots and reporting on the final vote. I will now introduce our terrific Board of Directors, all of whom are present virtually today. Sue Decker. Sue is Founder and CEO of an exciting start-up around engagement of college students called Raftr. Previously, she was President of Yahoo! Sue also sits on the Board of Berkshire Hathaway and other noteworthy companies. Ken Denman. Ken is a leading technology executive. He was formerly CEO of Emotient, which was acquired by Apple. Ken sits on several other corporate boards and is a trustee of the University of Washington Business School. Richard Galanti, our long-standing CFO. Richard is truly one of the best in the business, and he is a former director of the Federal Reserve Bank of San Francisco. Craig Jelinek, our fantastic CEO, who needs no introduction here. We'll all hear more from Craig in just a few minutes. Sally Jewell. Sally is our newest director. She was formerly CEO of The Nature Conservancy. Prior to that, she was Secretary of the Interior in the Obama administration and previously CEO of coat retailer, REI. Charlie Munger, another person who needs no introduction. Charlie is Vice Chairman of Berkshire Hathaway and Warren Buffett's alter ego. Charlie is renowned for his wisdom and his acerbic wit. Jeff Raikes. Jeff is Co-Founder of The Raikes Foundation. Previously, Jeff was CEO of the Bill & Melinda Gates Foundation and a senior executive at Microsoft. John Stanton, another of Seattle's leading lights. John was a pioneer of the wireless industry as CEO of Western Wireless and of T-Mobile USA. He is a director of Microsoft and managing partner of the Hometown Seattle Mariners. Maggie Wilderotter. Formerly CEO of Frontier Telecom (sic) [ Frontier Communications ], Maggie was one of the few women CEOs of a Fortune 500 company. She's currently a director of several noteworthy public companies and has served as a director on a number of other boards, including many of the most prominent companies in America. And finally, our Director Emeritus, Rick Libenson. Rick was one of the creators of the warehouse club industry and has been a key adviser to the company for over 25 years. Okay. Onto business. We're going to do the formal part of the meeting first. I hope to make that efficient and relatively brief. Then we will turn it over to Craig to give his presentation on the state of the company, after which we will open it up to questions. The polls are still open and will close shortly. Shareholders who held shares as of the record date for this meeting are entitled to vote. If you have already voted your shares, there is no need to vote again unless you wish to change your vote. If you would like to vote your shares or change your vote, you may do so while the polls are open by following the instructions on your screen. The record date for the meeting was the close of business on November 12, 2020. Each shareholder of record on November 12 was mailed a notice of availability of proxy statement on or about December 10. The proxy statement was posted on our corporate website on December 10. Affidavits of mailing and posting of these materials will be attached to the minutes of this meeting. A complete list of shareholders of record entitled to vote is available for your inspection through the link on your meeting page. This list will be kept open for inspection during the entire meeting. To conduct business, we need a quorum, and a quorum for this meeting is a majority of the shares entitled to vote. The inspector of election has reported that we do indeed have a quorum today. I will now review the various items which were put up for shareholder votes and the preliminary results of the voting. Preliminary vote totals for the 7 individuals nominated as directors show that all have received substantially in excess of a majority of the shares voting. Accordingly, the nominees have all been reelected as directors. Preliminary vote totals for the other 2 proposals, the say on pay and ratification of the selection of auditors, also show both receiving substantially in excess of a majority of shares voting. These proposals both passed also. That concludes our official business. The polls are declared closed, and the inspector of election will tabulate the votes. The final results will be reported in our 8-K, which will be filed shortly. As Chair of the meeting, I declare the official meeting adjourned. Thank you all. I would now like to introduce our CEO and President, Craig Jelinek. Following his presentation, Craig will address questions and comments from shareholders for approximately 30 minutes. Please remember, only shareholders are permitted to ask questions and make comments. Shareholders that have logged in with a control number may submit a question at any time by clicking on the submit question button on your screen. And please keep your questions and comments brief because we want everyone to get a chance to get theirs in. Others who have comments are free to address them after the meeting in writing to the Corporate Secretary. Craig, take it away.

Good afternoon. I'd like to welcome everyone to the Costco 2021 Shareholders' Meeting, our first virtual shareholder meeting. Another first of many things this past year due to events surrounding the coronavirus pandemic. As the virus pandemic swept the globe and significantly impacted all of our lives, Costco was designated as an essential business. We took this responsibility seriously. In time of uncertainty and panic, we went all out to try to maintain adequate supplies of necessities, including food, cleaning products and personal care items. In our warehouses, we installed protective barriers and increased sanitation. In addition, we established social distancing protocols and face-covering policies, created special operating hours for high-risk individuals and first responders and donated surgical masks to health care workers. In order to reward our employees for their service in difficult times, we temporarily increased spending for wages and benefits. These increases are still in place. Since our last meeting, we've all experienced an extraordinary year. I want to extend my deepest gratitude to our Costco employees, especially those on the front lines of our warehouses, who's exemplary service to members, dedication to the company and support of one another have truly demonstrated excellence. I also thank Costco members around the world for their loyal support and trust in our business. Together, we've made it through this trying year, and we will tackle the future with strength and optimism. Over a year's time, the investment community has responded positively to our efforts. We feel fortunate to have the support of our shareholders. The following presentation shares some highlights from the past fiscal year. After the presentation, we will allow time for questions where shareholders are welcome to submit throughout the presentation. Thanks again to our employees, our members, suppliers and shareholders for being part of what made Costco successful this past year. I'm very proud to be associated with all of our valued stakeholders. [Presentation]

We ended the year with 795 Costcos globally, which included 13 new openings this year. One of the problems we had with new openings, we've always tried to get to about 20 buildings. With the pandemic this year, it was very difficult to get things accomplished. Currently, right now, this day we have 803 Costcos. Some of the buildings we opened, our first building in Mississippi -- Ridgeland, Mississippi. Perth. This was our 12th building in Australia, which is also our largest volume building that we have in Australia. This one is about 3,000 miles away from the rest of the buildings, which is on the West Coast of Australia. Sacramento Business Center, we opened this year. We currently have 22 business centers. We continue to see big opportunities in growing our business centers. Our third building in Spain, Las Rozas, which is in Madrid, and we see a good opportunity to continue to expand in Spain. Kisarazu, Japan. This was our 27th building in Japan that we opened up this year. We will continue to expand in Japan. Idaho Falls, our building that we opened up in Idaho this year to help us fill out that market. Bismarck, North Dakota. Saint-Hubert Business Center in Québec. This was our second business center in the Canadian market. Midland, Michigan, which is right in Saginaw, Michigan. One of the new buildings we put in that market. And north Taichung, Taiwan. This is our 14th building in Taiwan. Other openings: Ontario Business Center; Saratoga Springs, Utah, which was our 11th building in Utah; Southwest Calgary, Alberta, which was our 7th building in Alberta, Canada; Cherry Hill, New Jersey; Champaign, Illinois; San Jose Business Center; Meridian, Idaho, which was our 3rd building in the Boise market; and Plainfield, Illinois, to round out the new buildings that we opened up this year. Costco today, we're the third largest global retailer, 14th largest in the Fortune 500. We currently have a market cap as of January 8 of $164 billion. The year we just finished in 2020, our biggest year, $163 billion. We currently have 117 million square foot of sell space. And currently now, we have 275,000 employees worldwide. As I told you earlier, we started with 803 warehouses worldwide, 14 in Taiwan. I won't go and read them all. You can certainly see them on the slide. Today, 59 million member households, 107 million cardholders, 88% worldwide renewal rate in our company and currently has $3.5 billion in membership fees each year. '20 highlights. Record sales and earnings, 8% comp sales increases. Exceptional teamwork, as you know, with the COVID-19 pandemic. Navigating through this, we grew our e-commerce at 50%, which delivery was a key to serve our members. We acquired Innovel, which is now Costco Logistics, to improve our last-mile delivery. We improved documentation and implementation of social and environmental processes in our operations. Our fiscal year, $163 billion; net income, $4 billion; earnings per share, $9.02. Our first quarter was a very good quarter for us with the pandemic, $42.347 billion; net income of $1.166 billion with $2.62 a share compared to $1.90 last year. As you can see, our traffic has been very strong since 2017. We took a hit in '20 because of COVID and the closures. We had a lot of markets that we had to monitor how many individuals came into the building that could shop. It was a very difficult year for shopping and retail. But this year, the first quarter, our traffic is up 5.5%. So we see brick-and-mortar being strong and stable and continuing to move forward. Some key highlights. TVs were a very big year for us last year particularly with the pandemic and people staying at home, 14% increase over the previous year. Computers, again, very big for us this year. I think that had to do a lot with people at home working from home, up 53% for fiscal '20. Another interesting thing, I don't know if this is a good thing or a bad thing with the pandemic, but one of the biggest increases we've ever had in beer, wine and spirits, up 17% over last year. Our produce business, very strong particularly with the closure of a lot of restaurants, up 16%. We're currently sourcing from 44 countries. Our meat department, significant growth, up 21%. One of the areas that we just continue to grow, if you could see over the years, our prime beef now, $570 million, continuing to grow, up 34% from the previous years. Our service deli, 101 million rotisserie chickens sold globally last year. One of the reasons that we've been able to keep in stock in these chickens and continue to maintain our price, we opened up our own poultry complex this year in Fremont, Nebraska, 432-acre site, and we're processing over 2 million chickens per week. Some merchandise highlights. A lot of new brands this year: Husqvarna, Wolverine, All-Clad, Hickey Freeman, just to name a few. We continue to always look for new brands that we can bring value to. And more and more, we're getting some of these brands that want to sell to us because of the amount of traffic we're generating in our buildings. Some examples, Klipsch premium audio become a very big supplier for us, all very high-end audio equipment, the surround sound system, $899.99; the channel surround sound system, $449.99; all are premium audio equipment. LG Electronics sales for 2020, 41%. Again, with Innovel, we continue to be a big opportunity to deliver appliances, large TVs, and this has become a very big supplier for us. Another new item. We've talked about this over the last couple of years, our Kirkland Signature golf ball new version, $24.99 for 24 balls, a savings of 74%. With the success that we've had with our golf ball, we've decided to get a little bit bigger into some other golf items: Kirkland Signature 3-piece wedge set, sale price of $159.99. That's a 67% savings in the market to brand. And our KS putter, which has also been a very big item for us, $139.99, which is a 65% savings in the market. I encourage if any of you like to golf, look into these products. Beauty. We're always trying to improve our beauty business with our member: Perricone no makeup mascara, $29.99; butter LONDON 4-piece nail set, $19.99. Other items that we were able to bring value: Alaska Airlines $500 gift card for $449.99; Uber Eats, which was very popular with delivery, $250 cards for $79.99. Costco Online with the pandemic and our delivery has also continued to be a big business for us with great opportunities particularly in larger-type items. Our websites worldwide, U.K., Taiwan, Korea, Australia, U.S., Canada, Mexico, we will continue to expand in these markets with more items and look at other countries where we do business. Some of the things we're trying to accomplish with our strategy with Costco Online, we want to complement our warehouse business convenience of big and bulky purchases, delivery and installation available. We've expanded our grocery online 2-day business, same-day fresh delivery and expand the Costco Treasure Hunt. Some of the unique items, and I know this looks a little pricey, Japanese Wagyu 8 6-ounce fillets for $629.99. You wouldn't want to have a steady diet of that, I don't think. Our Grand Traditions basket. This is 20 pounds of imported chocolates -- high-end imported chocolates and European cookies and crackers, and prosciutto leg kit, 12 pounds, $219.99, very popular items this holiday season. Other Treasure Hunt online business, we've got a Babe Ruth baseball -- autographed baseball for $64,000. We're offering a Ty Cobb-autographed Louisville slugger bat for $160,000. Other great items, diamond solitaire ring, one of a kind, $170,000; 1.5-carat diamond solitaire, as you can see, $24,000; and the diamond stud earrings, $118,000, all very exciting items that we have online. Our grocery online business, we actually have 2 member options in the U.S. We have same-day all groceries, including fresh and household supplies, through CostcoGrocery, can be delivered same day with a partnership in Instacart. And then we have 2-day, which is nonperishables food and household supplies, which currently we have in Canada, U.K., Taiwan, Korea, Australia and Japan. We will be starting other countries on same-day during the next year. Costco Logistics. We closed the purchase of this in March of 2020, which is basically the same time that things got interesting with the virus. We bought this from Transform, which is Sears. The strategy was to drive our e-commerce business. We're going to be the best-in-class in delivery and installation experience for our members, faster delivery at a better price. We found that we can expand offerings to other categories, i.e., we're doing water heaters. We'll look at other possible items, riding lawn mowers, improve value to our members, which was really how we run our business. What we've created is a big and bulky in-cart scheduler. The member has the ability to schedule delivery when you buy it, 3- to 5-day scheduled delivery. We're currently in 50 states plus Puerto Rico. We think we can be more efficient and reduce contacts to order. And again, we're going to expand the service level to White Glove. Just to show some of the success we've had. Our major appliances fiscal sales, 44%. You've got the scheduler, self-select delivery data checkout. We have Quick Ship to serve the need-it-now market. This has really helped our major appliance business, and we see a big opportunity moving forward with this. Furniture year-round with this delivery service, just some example: Thomasville dining set, $999; and Tisdale modular sectional, [ $1,099 ], all with White Glove delivery and setup. Exercise year-round, which has been a very big category for us this year with all the gyms and things being closed down: treadmill, $799 delivered; indoor ProForm cycle. Patio year-round, just an example, pergolas delivered in 3 days, furniture sets delivered in 3 days. $2,299 in the patio set delivered, $17.99 pergola delivered in 2 days. Our business centers, as I told you earlier, we see a big opportunity with business centers. We currently have 21 in the U.S. and 2 Canadian locations with 4 more to be opened in 2021. Just an example of our second business center that we opened up in Canada in Québec. Our pharmacies, 48,500,000 prescriptions filled last year globally. One of the things that we've added this year is the Costco app. You can go in, you can schedule flu shots, COVID vaccination appointments and other health clinics, view listed medications for your family and pets, request refills, check on status of your prescriptions. You have the ability with this to also transfer your prescription from another pharmacy to Costco. Optical. 5.9 million pairs of glasses sold globally. One of the businesses that struggled a little bit this year is the hearing aid business, 516,000 units sold globally, still a big business. But with the pandemic, people have been a little concerned until there's a vaccination coming in and having their hearing tested. Our food court, although it was difficult during the year with no seating, 151 million hot dog and soda combo sold globally. Our gasoline business still did $14 billion in sales, which was slightly down from last year because of the stay-at-home orders. But it's starting to come back as we speak. Tire center, 8.8 million tires sold globally. Our financial position. Cash and short-term investments, $14 billion; property and equipment, $22 billion; long-term/short-term debt, $7 billion; stockholders' equity, $14.8 billion. We initially made our first dividend in 2004 at $0.40 per year. We're currently at $2.80 per year. Our growth rate is 13% per year, and we pay out annually $1.2 billion. And also, as you know, [ forced vessels ] in the last 8 years. Our last special dividend, as you know, we announced November 2020, we paid in 2020 of December, was $10 per share or $4.4 billion. Stock repurchase since inception, which we started in 2005, $9.2 billion total expenditure. We've retired 131 million-plus shares at an average cost of $70.11. We purchased $198 million in fiscal 2020, an average of $308.45 a share. I talked about we always wanted to get 20-plus buildings a year expansion. We had a hiccup last year, and we're back with this year in 2021 we should open up 22 new Costcos. So our plan is just to continue to grow the business both internationally and in the U.S. Sustainability, very important to us. You can also go on our website if you choose and look at all the updates that we're going to have moving forward. But we're committed to the environment as we should be. There's 4 pillars. One, as we've always done, take care of our employees. We're going to continue to support the communities where we operate, operating efficiently in an environmentally responsible manner, and our sourcing is going to be in a sustainable manner. If you look at our employees, 275,000 employees worldwide, premium benefits paid, industry-leading compensation, someone after 10 years is making almost $29 an hour. Benefits for full-time and part-time employees, including leave, childcare for COVID. 91% of our employees are eligible in the U.S., 97% are enrolled. And we have a stable workforce. 36% of our employees have 10 years plus, and our turnover is less than 7% after 1 year. We're very proud of that. Diversity. We certainly have a long way to go, but we strive to have a diverse workforce that represents the communities where we do business, and we are committed to continue to improve on this. Our commitment to the communities where we do business, 1% of pretax profit donated every year, over $48 million in 2020: United Way, Red Cross, Children's Hospital. We made an investment this year of $25 million to the Black Economic Development Fund. We're also Feeding America, 56 million families fed. And World Vision, we donated $80 million in merchandise. Our operations remain efficient, low-cost operators. We're going to reduce energy, water, waste and emissions, which is really just good business; adopt the climate action plan to reduce carbon footprint. We have a 4-year plan: sustainable construction, refrigeration efficiencies and efficiencies in distributing goods. And also, not only is this the right thing to do, but again, there's a payback in trying to do all these things in terms of controlling your expenses. Commitment to merchandise, ensure supply of high-quality merchandise at competitive prices. That's what we'll continue to sustain our business. We expect human rights around the world, animal welfare and fisheries, [indiscernible] products and programs to make sure they're all sustainably sourced, adopt forest conservation commitment and manage environmental impact and packaging. Our commitment is to reduce packaging. Additional 2.6 million pounds of plastic we reduced in 2020. We converted 6 million pounds of single-use foodservice packaging to compostable items. We increased recycled content in our packaging, and we're going to increase recyclability and compostability. And we need to educate our employees, our suppliers and our members. Our company annual growth, we're always very proud of this since 1985: net sales, 12%; net income, 13%. Our stock price has appreciated at 17% a year compared to the S&P of 8.8%. We'll start answering your questions.

Our first question is how does Costco expect to support COVID-19 vaccinations and appointments for shots?

Well, once we get the different approvals from the different governments to be able to get the vaccine, we will start distribution and set up our scheduling where you can go online and schedule your appointment. We're currently doing this in Alaska, in New York, parts of California. In certain states, we have not gotten much any vaccine yet to start on the vaccinations based on certain tiers that the government has established in each state and county.

Craig, can you comment on how our Shanghai location is doing and our plan for future expansion in China?

We're very pleased with Shanghai. As you know, that was our first building that we opened up in the China market. We currently have 2 more: Suzhou in China and Pudong, which is also in the Shanghai market. We will open Suzhou this December and Pudong, December of '22. It's a long construction process over in China based on the complexity of building the buildings. But we continue to look for sites in China and feel very positive about expansion in China.

Can you talk about supply chain challenges that the company faced in 2020 and how those are expected to continue in 2021?

Well, as you know, with COVID, that certainly put a damper on everything in terms of being able to shop, being able to purchase goods in terms of distribution of goods. A lot of factories could not work at full-scale because of the COVID, and they didn't have people and also social distancing. So getting goods was a big problem in '20. And also, with things like certain paper -- or paper products like toilet paper, towels, that was very difficult just from the demand and all these manufacturers, not only were they short of people, but they're also working at full capacity. And we continue to think we're going to see this particularly in some of the transportation issues in nonfood for part of this year. But we'd hope at the end of calendar '22 that -- excuse me, the calendar of '21, that things would be back to some type of normalcy.

How are Costco employees faring during the pandemic?

Well, it's been -- we've certainly had our share of positives. We don't believe that that's necessarily happened in the workplace. We have given plenty of -- we've paid a higher premium for people during COVID. We've allowed people 65 and over for a period of time to stay at home and be compensated. We're doing work from home for a lot of our employees in the main office. So it's been a difficult year, and it's been a difficult year for our employees who also have children in school and have to work at the same time. So we've tried also to navigate with our working employees that have to deal also with self-education at home. But I think for the most part, we've -- certainly, our employees have risen to the occasion and navigated through this thing. And we hope with the vaccination, we see light at the end of the tunnel. As you might have read, we've had 2 buildings where we had quite a few positives. One was in Sunnyvale, California. We don't know -- necessarily know that, that happened in the workplace. But that building came in and the health department came through and tested all of our employees. They're back to normal. And we also had one in Union Gap, which is Yakima, Washington, where we had a very high rise of positive COVIDs. We've also completely worked through that. The health department did give us a [ clean bill of ] health, the way we are running our business, and we currently now have everybody back to work and everybody is tested negative.

What's happening with curbside delivery at Costco?

We are currently testing that in just one market. We're testing that in Albuquerque, New Mexico, and we've been doing it now for 2 weeks. One of the reasons that we decided to try it, because we got ourselves in a situation where the local government chose to cut down capacity to something like, I believe, 75 people coming in, including new employees. So we're testing it there, mixed results. The jury is out to see what will -- if we will really do anything with that business going further.

What is Costco doing to address climate change?

Well, that's very important to us. If you look -- probably the best way to talk about that is if, I guess, if you went and looked at our recently sustainability commitment, if you go on our website, it's a goal of ours to reduce emissions. And we've got a 10-point plan to get there, focusing on emissions as well as better understand the emissions of our suppliers. So I encourage you to -- we are reporting it, and you'll see it online. And if you go on to our website, you'll see everything that we're trying to accomplish.

How has your sales of pet items fared during the pandemic? And what do you see for the future there?

Well, pet has continued to be a growing business for us, not only at the pet category in terms of toys, in terms of pet beds, but also even the pet meds. So that's become a big category for us, particularly in the, I guess for better choice of words, I'm going to say, furnishings. The pet food has always been strong, but with all the other toys and things like that, beds, we see a big opportunity to continue to grow that business.

What's happening with the photo department at Costco?

Well, over the last probably 5 years, we've gradually closed down our photo labs. And with technology and people storing things on their phones, it's become a nonprofitable business for us. So we've made the decision to better utilize our space in these buildings for other categories. That being said, you'll still have availability to do things online and pick up at the warehouse.

Do part-time workers at Costco receive health benefits? And if so, how do they qualify?

Yes, they do allow -- get benefits. Anybody working over 27 hours a week are entitled to benefits at Costco. I think on -- we have roughly 97% of our employees eligible for benefits, and I think 91% of them choose to take those benefits.

Does Costco plan to source more products from the U.S. and Canada rather than other countries, such as China?

We would love to continue to look for it. We're always trying to find local products in every place that we do business. Now that being said, it's much easier with the food and sundries type business than it is for nonfood. To the extent that we can find nonfood suppliers that can create a quality item with value, we would continue to move in that direction. Keep in mind, a lot of products that are put together in the United States are usually coming with components that come out of China. So it's a difficult situation.

What's the plan for allowing members to see online the inventory levels at their local warehouses?

That's probably one of the biggest questions or frequent questions that I get asked. We need to get there. I think we're probably about a year out from being able to get that done, but that is a goal of ours to accomplish that.

Are you concerned that member usage of third-party delivery services, such as Instacart, and their ability to do so without a Costco membership will hurt Costco membership in the future?

Well, keep in mind, Instacart is a business. It's a third-party business. Instacart is actually a -- has a membership. So they have the ability to shop for their business. That being said, if you choose to use Instacart, through them, you'll pay at least a 10% to 12% higher premium to get your goods delivered. It makes more sense for the person buying through Instacart to do it through Costco and have a Costco membership.

What is Costco doing to make available more meat alternative items in its warehouses?

Well, we continue to look at grass-fed products, although that is beef. And we continue to look for -- Impossible beef, we're selling in some of our locations. It has mixed results depending on the market, but we are continuing to look at alternatives.

What is Costco doing to address the issue of forced labor in supply chains from China and other countries?

We take our code of conduct very seriously. And we do many audits, not only our suppliers, make sure that they're doing audits. But we also, as a company, do audits. And obviously, pre-COVID, we also had individuals from Costco going through these factories. So if it's -- and we also have the ability for a whistleblower line for anybody to bring this to our attention. And we address these. We take these very seriously, and we will deal with it accordingly including, if necessary, if known to happen, we will discontinue the supplier.

What is the status of self-checkout at Costco warehouses?

Well, we're currently doing self-checkout and I want to say in about, I'm going to guess, is 250 locations and we continue to move it forward. So it's something that's going to be here for a period of time until we find better technology to get people in and out of our Costcos.

Has Costco considered opening a location in Israel?

That's not something that we have thought about. We have enough on our plate right now with Europe and Asia and the United States. Australia, we are venturing out -- or venturing out to New Zealand and -- but I wouldn't say never, but I don't see it in the near future.

What are the big challenges you see for the company in the coming year?

Well, I think we certainly still have to navigate COVID and supply chain. And about our -- your business, it's all about people. It's important that we keep not only our members healthy and our employees safe and healthy, our members healthy and continue to work with our suppliers to make sure that we have supply of goods. I guess this -- I'll check with our host. Is that it on questions?

That's all the questions we're going to address today, and questions that were posed but not answered will be answered on our Investor Relations site.

Thank you for your time, and we appreciate you being shareholders. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.