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 November, which started on Monday, November 1, and ended on Sunday, November 28. This period is compared to the 4 weeks that began last year on Monday, November 2, and ended on Sunday, November 29. 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 November came in at $18.13 billion, an increase of 15.7% from $15.67 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., the 4 weeks is up 14.3%; 12 weeks, 14.9%; 13 weeks, 15.2%. In Canada, the 4 weeks was at 15.7%; 12 weeks, 17.2%; 13 weeks, 16.8%. Other international, the 4 weeks is 11.0%; 12 weeks, 13.4%; 13 weeks, 13.0%. Total company for 4 weeks is 14.1%; 12 weeks is at 15.0%; and the 13 weeks is at 15.1%. E-commerce, the 4 weeks was at 12.2%; 12 weeks, 14.3%; and the 13 weeks, 12.8%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 4 weeks was at 9.1%; 12 weeks, 9.9%; 13 weeks, 10.2%. For Canada, the 4 weeks is at 7.6%; 12 weeks, 8.3%; 13 weeks, 8.1%. Other international, 4 weeks was 11.3%; 12 weeks, 10.9%; 13 weeks, 11.0%. Total company, 4 weeks was 9.2%; 12 weeks is at 9.8%; 13 weeks, 10.0%. E-commerce, the 4 weeks was 11.7%; 12 weeks, 13.3%; 13 weeks, 12.0%. Our comp traffic or frequency for November was up 5.5% worldwide and 3.3% 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 4.7%. Other International, negatively by approximately 2.5% and total company positively by approximately 0.3%. Gasoline price inflation positively impacted total reported comp sales by approximately 4.6%. The average selling price was 57% higher year-over-year at $3.62 per gallon this year compared to $2.30 per gallon last year. Worldwide, the average transaction for November was up 8.1%, 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 year-over-year sales increases were Texas, Southeast and Midwest. Other international and local currencies, we saw the strongest results in Mexico, Japan and Taiwan. Moving to our merchandise highlights. The following comparable sales results by category for the month exclude the positive impact of foreign exchange. While we continue to see inflation year-over-year, particularly within fresh foods and food and sundries, there was some moderation in inflation during November relative to October. Food and sundries were positive mid-single digits. Delhi, frozen and candy were the strongest departments. Fresh foods were up mid- to high single digits. Better-performing departments included bakery and service deli. Nonfoods were positive low double digits. Better-performing departments included jewelry, tires, domestics and apparel. Ancillary business sales were up mid-50s, gas, food court and pharmacy or the top performers. Looking ahead, we will release our Q1 fiscal '22 earnings on December 9. 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. The December sales reporting period began November 29 and ends January 2 compared to the 5 weeks that began last November 30 and ended January 3, 2021. December sales will be announced Wednesday, January 5 at 1:15 p.m. Pacific Time. If you have any questions regarding our November 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, December 8. Thanks for calling. Have a great day.