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 September, which started on Monday, August 30, and ended on Sunday, October 3. This period is compared to the 5 weeks that began last year on Monday, August 31, and ended on Sunday, October 4. 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 September came in at $19.50 billion, an increase of 15.8% from $16.84 billion last year. Comparable sales were as follows: on a reported basis, 5 weeks, U.S. was at 14.6%; Canada, 14.9%; Other International, 12.0%; total company, 14.3%; e-commerce, 10.6%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: for the 5 weeks, the U.S. was at 10.0%; Canada 7.3%; Other International, 8.0%; total company, 9.4%; and e-commerce, 9.6%. Our comp traffic or frequency for September was up 7.2% worldwide and up 7.4% 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 4.9%; Other International, positively by approximately 2.8%; and total company, positively by approximately 1.1%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.8%. The average selling price was 41% higher year-over-year at $3.38 per gallon this year compared to $2.40 last year. Worldwide, the average transaction for September 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 stronger sales increases were Texas, Southeast and San Diego; Other International and local currencies, we saw the strongest results in Mexico, U.K. and Japan. 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 low double digits. Better-performing departments included home furnishings, jewelry, tires and garden. Ancillary business sales were up low to mid-40s. Gas, food court, optical and pharmacy were the top performers in the month. Looking ahead, the October reporting period will include the 4 weeks beginning October 4 and ending October 31 compared to the 4 weeks beginning October 5 and ending November 1, 2020. October sales will be announced Wednesday, November 3 at 1:15 p.m. Pacific Time. If you have any questions regarding our September 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, October 13. Thanks for calling. Have a great day.