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 4-week retail month of July, which started on Monday, July 5, and ended on Sunday, August 1. This period is compared to the 4 weeks that began last year on Monday, July 6, and ended on Sunday, August 2. 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 July came in at $15.21 billion, an increase of 16.6% from $13.04 billion last year. Comparable sales were as follows: on a reported basis, in the U.S., the 4 weeks was at 13.1%, 48 weeks 14.8%. In Canada, the 4 weeks was at 16.5%, 48 weeks 20.6%. Other international, 4 weeks is at 14.4%, 48 weeks 19.7%. Total company, the 4 weeks is at 13.8%, 48 weeks 16.2%; and e-commerce on a 4-week basis 7.4%, 48 weeks 48.9%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: the U.S. for the 4 weeks was at 8.5%, 48 weeks 13.9%. Canada, the 4 weeks was at 5.5%, 48 weeks 12.7%. Other international, 4 weeks was at 7.8%, 48 weeks 13.9%. And total company in the 4 weeks was at 8.0%, 48 weeks 13.8%. E-commerce, the 4 weeks was at 5.7% and 48 weeks 47.0%. Our comp traffic or frequency for July was up 6.9% worldwide and up 5.8% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted July comp sales as follows: Canada positively by approximately 8.4%, other international positively by approximately 5.5% and total company positively by approximately 1.9%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.9%. The average selling price was 40% higher year-over-year at $3.35 per gallon this year compared to $2.40 last year. Comp gasoline volume was up significantly relative to last year and was also positive versus 2019. Worldwide, the average transaction for July was up 6.4%, which included the positive impact from gasoline inflation and FX in terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest sales increases were Texas, Southeast and Los Angeles. Other international in local currencies, we saw the strongest results in Mexico, Korea and Taiwan. Moving to the 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 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 domestics, sporting goods, jewelry and hardware. And for your businesses were up mid-40s, gas, food court and optical were all significant drivers. Looking ahead, the August reporting period will include the 4 weeks beginning August 2 and ending August 29 compared to the 4 weeks last year, beginning August 3 and ending August 30. August sales will be announced Wednesday, September 1 at 1:15 p.m. Pacific Time. If you have any questions regarding our July 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, Wednesday, August 11. Thanks for calling, and have a great day.