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 August, which started on Monday, August 2, and ended on Sunday, August 29. This period is compared to the 4 weeks that began last year on Monday, August 3, and ended on Sunday, August 30. 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 August came in at $15.75 billion, an increase of 16.2% from $13.56 billion last year. For the 16 weeks ended August 29, net sales came in at $61.4 billion, an increase of 17.4% from $52.3 billion last year. For the 52 weeks ended August 29, net sales came in at $192.1 billion, an increase of 17.7% from $163.2 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., 4 weeks, 14.7%; 16 weeks, 14.9%; 52 weeks, 14.8%. In Canada, the 4 weeks was at 13.4%; 16 weeks, 19.5%; 52 weeks, 20.0%. Other International, 4 weeks, 12.2%; 16 weeks, 15.0%; 52 weeks, 19.1%. And Total Company, the 4 weeks was 14.2%; 16 weeks, 15.5%; 52 weeks, 16.0%. E-commerce, 4 weeks, 2.8%; 16 weeks, 11.2%; and 52 weeks, 44.4%. Comparable sales, excluding impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 4 weeks, 10.1%; 16 weeks, 10.3%; and 52 weeks, 13.6%. Canada, 4 weeks, 5.2%; 16 weeks, 6.7%; 52 weeks, 12.1%. Other International, 4 weeks, 7.3%; 16 weeks, 7.3%; and 52 weeks, 13.4%. Total Company in the 4 weeks was at 9.1%; 16 weeks, 9.4%; 52 weeks, 13.4%. And e-commerce, the 4 weeks is at 1.8%; 16 weeks, 8.9%; and 52 weeks, 42.6%. Our comp traffic or frequency for August was up 7.1% worldwide and up 7.5% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada positively by approximately 5.4%. Other international, positively by approximately 3.6%. And Total Company positively by approximately 1.2%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.9%. The average selling price was 41% higher year-over-year at $3.39 per gallon this year compared to $2.41 last year. Comp gas volume was up significantly relative to last year and was also positive versus 2019. Worldwide, the average transaction for August was up 6.6%, 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 strongest sales increases were Texas, Southeast and L.A. Other International, in 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 mid- to high single digits. Sundries and Candy were the strongest departments. Fresh Foods were up mid- to high-single digits. Better-performing departments included Service, Deli and Bakery. Nonfoods were positive mid- to high-single digits. Better-performing departments included Housewares, Sporting Goods, Jewelry and Domestics. Ancillary businesses were up mid-40s. Gas, food court and pharmacy were all significant drivers. Looking ahead, the September reporting period will include the 5 weeks beginning August 30 and ending October 3 compared to the 5 weeks beginning August 31 and ending October 4, 2020. September sales will be announced Wednesday, October 6 at 1:15 p.m. Pacific Time. Prior to September sales, we will be releasing our fourth quarter and total year fiscal '21 earnings on September 23. Earnings will be announced after market close with a conference call to follow at 2:00 p.m. Pacific Time. The call can be streamed live via our Investor Relations website. If you have any questions regarding our August 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 5:00 p.m. Pacific Time, Wednesday, September 8. Thanks for calling. Have a great day.