Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, and thank you for calling Costco Wholesale Corporation. I'm David Sherwood, AVP of Finance and Investor Relations, and I will review our sales results for the 5-week retail month of June, which started on Monday, May 31, and ended on Sunday, July 4. This period is compared to the 5 weeks that began last year on Monday, June 1, and ended on Sunday, July 5. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results and/or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call and sales release as well as other risks identified from time to time in the company's public statements and reports filed with the SEC. Forward-looking statements speak only as of the date they are made, and the company does not undertake to update them, except as required by law. As reported in our release, net sales for June came in at $18.92 billion, an increase of 16.9% from $16.18 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., the 5 weeks was at 12.1%; 44 weeks, 14.9%. In Canada, the 5 weeks was at 23.4%; 44 weeks, 21.0%. Other international, the 5 weeks was at 15.4%; 44 weeks, 20.2%. Total company, 5 weeks, 14.1% and for the 44 weeks, 16.4%. And e-commerce for the 5 weeks was at 20.8% and for the 44 weeks, 53.4%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 5 weeks was at 7.8%; 44 weeks, 14.4%. In Canada, the 5 weeks is at 8.9%; 44 weeks, 13.5%. Other international, the 5 weeks is at 6.8%; 44 weeks, 14.5%. Total company, the 5 weeks is at 7.9% and the 44 weeks is at 14.3%. E-commerce for the 5 weeks 18.0% and for the 44 weeks, 51.5%. Our comp traffic or frequency for June was up 8.1% worldwide and up 6.9% in the U.S. This year's June retail month had 1 fewer shopping day versus last year due to the calendar shift of Memorial Day. This negatively impacted total and comparable sales as well as traffic by approximately 1.5% to 2%. Foreign currencies year-over-year relative to the U.S. dollar impacted June comp sales as follows: Canada positively by approximately 12%; Other international, positively by approximately 7.5% and total company, positively by approximately 2.6%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.6%. The average selling price was 41% higher year-over-year at $3.24 per gallon this year compared to $2.30 last year. Comp gasoline volume was also up significantly relative to last year and was also positive versus 2019. Worldwide, the average transaction for June was up 5.5%, which included the positive impacts from gasoline inflation and FX. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the stronger sales increases were Texas, L.A. and Southeast; other international and local currencies, we saw the strongest results in Mexico, Korea and Taiwan. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the positive impact of foreign exchange. Food and sundries were positive low single digits. Candy, sundries and frozen foods were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included service deli and bakery. Nonfoods were positive low double digits. Better performing departments included special events, kiosks, toys and seasonal, sporting goods, jewelry and domestics. Ancillary business, sales were up mid-40s. Gas, food court and optical were all significant drivers. Looking ahead, the July reporting period will include the 4 weeks beginning July 5 and ending August 1 compared to the 4 weeks last year, beginning July 6 and ending August 2. July sales will be announced on Wednesday, August 4 at 1:15 p.m. Pacific Time. If you have any questions regarding our June sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255; Josh Dahmen at (425) 313-8254 or myself, David Sherwood, at (425) 313-8239. This recording will be available until 5 p.m. Pacific Time, Thursday, July 15. Thanks for calling, and have a great day.